Even if Ms Sitharaman did not lie in Parliament, can she explain how HAL has been allowed to reach such a financially perilous position?
The controversy over the Rafale deal has seen heavy sparring between the BJP and the Congress in Parliament over the last week. It spilled over to the weekend as well, as Congress President Mr Rahul Gandhi and Defence Minister Ms Nirmala Sitharaman were involved in a Twitter war. The argument was over a report in TOI regarding a statement made by the Defence Minister in Parliament pertaining to the order book of Hindustan Aeronautics Ltd (HAL).
Ms Sitharaman had said in Parliament that around Rs 1 lakh crore worth of orders were in the ‘pipeline’ for HAL. In the TOI report, some senior members of HAL lamented on condition of anonymity that they had not received any money out the Rs 1 lakh crore figure being quoted. The officials stated, “HAL is a listed company now. You are free to verify our order books, where you will find not a single rupee of the said Rs 1 lakh crore has come to HAL, since not a single order, as claimed, has been signed till now. We have a responsibility to shareholders who cannot be led to believe we have orders when we don’t.”
Another TOI report on Friday revealed one more shocker. HAL was compelled to borrow Rs 1,000 crore to pay salaries to its staff for the first time in 2-3 decades. CMD Mr R Madhavan had told the daily, “Our cash in hand is in the negative, we’ve had to borrow close to Rs 1,000 crore as an overdraft (OD). By March 31 we’ll have minus of Rs 6,000 crore, which becomes unsustainable. We can borrow for day-to-day work, but not for project purchases.”
There are pending dues of around Rs 15,700 crore from the armed forces, which are expected to touch Rs 20,000 crore by March 31. Madhavan also lamented about some 2,000 vendors being dependent on HAL, mostly MSMEs. After the report on HAL regarding the order book, Rahul Gandhi immediately took to Twitter to attack the Defence Minister on lying in Parliament to defend the Rafale deal:
When you tell one lie, you need to keep spinning out more lies, to cover up the first one.
In her eagerness to defend the PM’s Rafale lie, the RM lied to Parliament.
Tomorrow, RM must place before Parliament documents showing 1 Lakh crore of Govt orders to HAL.
Or resign. pic.twitter.com/dYafyklH9o
— Rahul Gandhi (@RahulGandhi) January 6, 2019
Nirmala Sitharaman promptly shot back clarifying that she had mentioned Rs 1 lakh crore orders being in the pipeline, as confirmed in the TOI report quoting Lok Sabha records:
It’s a shame that the president of @INCIndia is misleading the nation.
HAL has signed contracts worth Rs 26570.8 Cr (Between 2014 and 2018) and contracts worth Rs 73000 Cr are in the pipeline.
— Raksha Mantri (@DefenceMinIndia) January 6, 2019
On Monday, the debate continued on the constitution of the orders being discussed and the interpretation of Ms Sitharaman’s statement. As per the document tweeted by the Defence Minister herself, around Rs 73,000 crore worth of orders are in the technical evaluation stage while orders worth Rs 26,560.8 crore have been signed.
Rahul has accused the Defence Minister again of misleading Parliament, as ‘evaluation stage’ does not mean orders are confirmed and the statement was misleading. In a press briefing on Monday, Rahul said that Nirmala Sitharaman is more a spokesperson for the Ministry of Defence and Narendra Modi, and she cannot be called the Defence Minister. He challenged the PM for a 15-minute debate once again.
He further made a serious allegation today that the government was depleting HAL’s resources to make way for Anil Ambani’s firm. He commented in apparent contrast to the financial situation of HAL and non-clearance of dues, “Dassault hasn’t delivered even a single helicopter till now but Rs 20,000 crore has been given to Dassault already.” Meanwhile HAL Chairman has confirmed that the Rs 15,700 crore owed by the government is for products and services that have been delivered by the PSU and therefore not advance payments.
That HAL doesn’t have enough cash to pay salaries, isn’t surprising.
Anil Ambani has Rafale. He now needs HAL’s brilliant talent pool to deliver on his contracts.
— Rahul Gandhi (@RahulGandhi) January 7, 2019
Predictably both sides as well as several media outlets are arguing on the semantics of what was said by the Defence Minister in Parliament. HAL tweeted a clarification on Sunday that orders for 83 light combat aircraft and 15 light combat helicopters were in advanced stages and that its finances are expected to improve with anticipated collections upto March 2018.
When we DKODE both arguments, the Congress must back up this serious allegation that Anil Ambani’s firm is being benefitted at the expense of HAL. On the other hand, even if Ms Sitharaman said that orders were in the pipeline, it is evident that the figure of Rs 1 lakh crore was given for emphasis and was meant to be taken at face value. After the report in TOI, the statements of Ms Sitharaman and HAL could best be construed as hurried attempts at damage control.
The fact, according to the report is that HAL has not received any dues so far and only around Rs 26,500 crore worth of orders have been signed, that too with a few months left in the tenure of the present government.
The lowest the company reached in terms of cash in hand was Rs 4,841 crore in 2003-04. In contrast, HAL had Rs 1,000 crore by end September 2018 and no cash in hand as of December 31, 2018. This also affects future procurements, as HAL spends around Rs 1,300 –Rs 1,400 crore every month for procurement and salaries (out of which Rs 358 crore goes into salaries).
Madhavan added, “Every month this keeps adding up we’ll get into trouble. Slowly purchase orders will not materialise and projects won’t move forward. This year we will be able to manage because of the past purchases. From April, purchases that are due won’t come, affecting repair and overhaul (ROH) work, which will come to a standstill from April.”
Interestingly, around Rs 6,000 crore of repair and overhaul work is done by HAL, and a major part is accounted by servicing of the ageing aircraft of IAF. So it indirectly affects the preparedness of India’s armed forces as well.
So the government needs to explain how HAL’s finances have reached such a perilous stage for the first time after so many years, which also affects 2,000 MSMEs and flies in the face of the Make in India initiative of the Modi government. While the PM accuses the opposition of weakening India’s security forces by attacking the Rafale deal, can Ms Sitharaman answer these very pertinent questions?