How will corruption go away with the same overall control of the ‘deep state resident’ in governments at the Centre?
by Lt Gen Prakash Katoch (Retd)
Sixteen months after Finance Minister Nirmala Sitharaman announced that the Ordnance Factory Board (OFB) would be corporatized, the Ministry of Defence (MoD) has dissolved the OFB, effective October 1, transferring its assets, employees and management to seven defence public sector undertakings (DPSUs) as part of ‘Atmanirbhar Bharat’. But how is ‘Atmanirbhar Bharat’ connected to corporatisation? Was OFB in violation of Atmanirbhar Bharat?
The seven new DPSUs are Munitions India Limited, Armoured Vehicles Nigam Limited, Advanced Weapons and Equipment India Limited, Troop Comforts Limited, Yantra India Limited, India Optel Limited, and Gliders India Limited. All OFB employees stand transferred en masse to the new DPSUs on terms of ‘foreign service’, without any deputation allowance (deemed deputation), initially for a period of two years. DPSUs are to seek permanent absorption option from the employees. A committee from the Department of Defence Production (DDP) is to guide the DPSUs on how to make the absorption package “attractive.” Wow!
The government approved the restructuring of the OFB and its 41 ordnance factories (OF) into seven DPSUs segmented into: Ammunition & Explosives; Vehicles; Weapons & Equipment; Troop Comfort Items (TCI); Ancillary; Opto-Electronics, and; Parachute Group. Also, the DDP had communicated that for the ‘interim’, the first set of Board of Directors of the corporate entities was to be appointed from among senior serving officials of OFB/DDP, the Armed Forces, the CGDA and nine existing DPSUs; for CMD appointment, Senior Administrative Grade (SAG) and above level officers of Indian Ordnance Factory Services (IOFS), OFB, with minimum five years’ service in the SAG; for Functional Directors’ appointment, SAG officers of the same with minimum two years’ service in the grade, and aged not more than 57 years as on October 1, 2021.
Previous attempts to corporatize OFB were stonewalled due to strikes by workers’ unions: Indian National Defence Workers’ Federation (INDWF) affiliated to Congress, All India Defence Employees’ Federation (AIDEF) affiliated to the Left, and Bhartiya Pratiraksha Mazdoor Sangh (BPMS), affiliated to RSS/BJP — all under the umbrella of Confederation of Defence Registered Associations.
However, the Essential Defence Services Bill, 2021, passed by Parliament in August, bars employees in defence production units from going on strike. This is a good development, though it is effective for one year as of now. But strikes by worker unions is only one part. The bane of OFB has been inefficiency, lack of accountability, poor work culture, substandard products costlier than that available off-the-shelf, wasteful expenditure and corrupt practices, which has also been pointed out by the CAG periodically. How will this change with OFB employees and the 76,000 OF workers transferring en masse to the new DPSUs?
How will corruption go away with the same overall control of the ‘deep state resident’ in governments at the Centre? Were the strikes even in the face of Chinese aggression on the behest of foreign intelligence? Was anyone probed?
A Few Examples of The OFB’s Functioning Are As Under:
Army found OFs supplying combat uniforms three times more expensive than those of the same material available in the open market.
In 2020, Army reported that faulty OFB ammunition resulted in 403 accidents over the past six years, the deaths of 27 soldiers, and a loss of Rs 960 crore.
An internal assessment sent by the Army to MoD last year said that 100 medium artillery guns could have been bought in place of the dud OFB ammunition lying around.
Army discovered this year that the complete lot of one crore indigenous Tavor ammunition supplied by OFB was defective.
CBI found that the six ‘Dhanush’ guns handed over to the Army in 2019 amidst a media blitz of ‘Make in India’ had been fitted with Chinese bearings, not German as agreed to. These bearings did not pass the quality test of Gun Carriage Factory (GCF) but they were still fitted in the guns handed over to the Army.
No product of the OFB has ever met the time schedule, by default or design. The costs escalate. To whose benefit exactly?
The overall control and management in the new DPSUs will continue with the same DDP-OFB-IOFS officials. The Armed Forces, despite being primary users, find a place only in the Board of Directors whereas they should have representation at every level. Relocation implies the cost of uprooting, creation of additional infrastructure and acquisition of land, which will be expensive, being in urban areas. Production may be disrupted due to reorganisation and relocation.
Instead of including members from existing DPSUs in the Board of Directors, members should have been taken from the private sector, which appears deliberately ignored. If savings and ‘Atmanirbhar Bharat’ were really the intent, DRDO entities should have been automatically merged into the new DPSUs, for example by combining:
Armament Research & Development Establishment (ARDE) with Advanced Weapons and Equipment India Limited.
Aerial Development and Research Organisation (ADRDE) and Centre for Air Borne System (CABS) with Gliders India Limited.
Vehicle Research Development Establishment (VRDE) and Combat Vehicles Research & Development Establishment (CVRDE) with Armoured Vehicles Nigam Limited.
Defence Metallurgical Research Laboratory (DMRL) with Advanced Weapons and Equipment India Limited.
Defence production in America has flourished with state-of-the-art technologies because defence production is wholly privatised. Government-controlled defence production is a success only in Communist countries like China where a rigid work schedule is enforced and production is closely monitored even in private industries. India’s chaotic democracy is witness to the worst work culture, slippages, wasteful expenditure and corruption in the government-controlled defence industry, organisations and structures. The OFB required ‘privatisation’ decades back, but no government has the will to take on the workers’ unions and the bureaucracy.
Hindustan Aeronautics Limited (HAL) needed to be privatised years ago but that, too, will not happen. OFB was considered the goose that laid golden eggs for the powers that be. So why privatise it when it can still hatch those golden eggs when ‘corporatized’ and turned into Donald Duck?
Keeping government control over defence research and production has terrific advantages. For example, 118 Arjun MK1 50-ton tanks can be forced on the Army that already had two regiments of 124 Arjun MK1 tanks and has been desperately looking for light tanks since the Chinese aggression in Eastern Ladakh in May-June 2020. But then, pumping more money into OFB-DPSUs means more golden eggs!