The government on Thursday doubled the financial powers of the finance and defence ministers to facilitate faster clearance of projects, particularly those related to defence acquisitions.
While the defence minister can now sanction projects up to Rs 100 crore (Rs 1 billion) as against Rs 50 crore (Rs 500 million) earlier, the finance minister can now sanction projects up to Rs 200 crore (Rs 2 billion) as against Rs 100 crore (Rs 1 billion) earlier.
The proposal to enhance the financial powers of the two ministers was cleared by the Union Cabinet at its meeting here chaired by Prime Minister Manmohan Singh.
Announcing this after the meeting, Parliamentary Affairs Minister P R Dasmunsi told reporters that the enhancement of the financial powers would cover 'non-scaled and new items.'
The step, according to official sources, was to prevent delays in acquisition of essential defence hardware and spares and is in line with the Arun Singh committee report.
However, sources made it clear that all mega defence purchases like the RFP's for acquisition of 126 fighter aircraft, purchase of 155mm towed, tracked and wheeled guns, and other big bill items of purchases worth more than Rs 200 crore would have to be cleared by the Cabinet Committee on Security.
Sources said the move to enhance the powers was also in view of Defence budget for 2006-07 being raised to a whopping Rs 89,000 crore (Rs 890 billion), up by Rs 7,300 crore (Rs 73 billion) from last year's revised estimates of Rs 81,700 crore (Rs 817 billion).
In the Budget, the capital outlay which covers armament acquisitions has been pegged at Rs 37,458 crore (Rs 374.58 billion) from last year's revised estimates of Rs 33,075 crore (Rs 330.75 billion).
In spite of recent streamlining of the defence procurement system, a staggering amount of Rs 1,300 crore (Rs 13 billion) remained unspent, when the new budget was formulated.
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