NDA’s Rafale deal 2.86% cheaper than UPA’s: CAG report

Ajay Banerjee
Tribune News Service
New Delhi, February 13

In a major boost to the Narendra Modi government, the Comptroller and Auditor General (CAG), in its report on the purchase of the 36 Rafale jets, has said the overall price of fighter jets is 2.86 per cent cheaper as compared to the UPA-era deal.

The 36 jets are being purchased for Rs 59,000 crore under a contract from Dassault Aviation of France.

The CAG report, however, mildly questions why the government did not accept a 20 per cent discount offered by the Eurofighter, which, along with Rafale, had been initially found technically fit during the UPA regime (2004-2014).

The CAG has used a price “alignment formula” to compare the pricing of the two deals offered by Dassault Aviation in 2007 and 2015. The report was tabled in the Rajya Sabha and Lok Sabha.

Comparing this deal with the 126 aircraft deal, which was later scrapped, the CAG says the Modi government saved 17.08 per cent on the India-specific enhancements. It paid 6.54 per cent more for engineering support package and performance-based logistics. Overall, it saved 2.86 per cent.

The report says the delivery schedule for the first 18 aircraft is better by five months than the proposed 126 aircraft deal. However, in terms of delivery of 36 planes, it is better by just one month. 

The CAG says there are no comparable costs, but in view of the Indo-French statement of 2015 that said the Inter-Government Agreement would be signed for supply of aircraft on terms that would be better vis-à-vis ‘price’, ‘delivery’ and ‘maintenance’ than the ones in 2007, a comparison has been made.

The Indian negotiating team aligned the quantities (36 planes) in the 2015 bid with that in the 2007 bid and then the price of 2007 was brought to the 2015 price level by applying the price escalation formula, which used the industrial cost indices published by the French National Institute of Statistics and Economic Studies.

This was the aligned price (price of 36 flyaway aircraft in 2015 if the prices were the same as the bid of 2007).

REPORT SAYS...

17.08% The NDA saved on India-specific enhancements

6.54% more paid for engineering support package and performance-based logistics

2.86% overall savings by NDA govt

Silent on dissent note, PMO parallel parleys

• CAG report says nothing on the dissent note of the MoD officials, who had objected to the price formula and also to the PMO’s parallel negotiations
• Sources say the dissent notes have been studied and are part of the 400-odd files on the subject but not added in the report

It cannot be that SC is wrong, CAG is wrong and only the dynast is right. Satyameva Jayate. CAG report reaffirms dictum. How does democracy punish those who consistently lied to the nation? Arun Jaitley, Union Minister 

Even if we accept CAG findings which we don’t, NDA deal is only 2.86% cheaper than UPA’s. This nails lie of Defence Minister and FM, who said it’s 9 to 20%  cheaper. Rahul Gandhi, Congress President