Podcast | This is What’s Happening in the Rafale Jet Deal

The Rafale jet deal is back in the spotlight after the Modi government’s CAG Report. What’s the update? Listen in.

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The Rafale fighter jet deal has flown back into the spotlight, riding on the back of the Modi government’s CAG report about the deal.

The CAG, i.e., the Comptroller Auditor General, tabled its report about the Rafale deal in Parliament on 13 February. The report said the 2015 Rafale deal was, in fact, 2.86 percent cheaper than the original deal struck under the UPA in 2007, you know, after you adjust for inflation.

The report is a big relief for the Modi government, because the Opposition has been attacking them constantly over the Rafale deal.

Like just a few days ago, in a news report, The Hindu said that three senior defence ministry officials had flagged issues, in a so-called dissent note, with the new Rafale deal negotiated by the Modi government as soon as it had happened, way back in June 2016.

Is that all? Nope.

More importantly, the three men who flagged the issues weren’t just senior defence ministry officials, but members of the Indian Negotiating Team that was selected for the Rafale deal. Listen to the podcast by clicking on the player below, for the rest of the story:

So what were the concerns that they flagged?

Well, for one, it flatly said that the new Rafale deal offer the French government made to India was not better than the original deal negotiated under the UPA government.

Oh also, the report said that under the new deal between the Modi govt and the French govt, Dassault Aviation would take much longer to deliver the jets than originally asked for. The CAG report responded to this by saying that all 36 jets would be delivered to India in 71 months, not 67 months as per the initial agreement.

Remember, the Supreme Court had defended the government’s Rafale deal and refused to order a probe into it, because in their own words a country can’t afford to be underprepared?

So under the new deal, and like the CAG report itself confirms, India would basically have to wait longer for the jets, than initially estimated.

Also report sent by the officials in 2016 said that the new deal was way more expensive than the old one according to their estimates.

That might have confused you, so in simple terms, the INT or the Indian negotiation team had said that the new deal for 36 Rafale jets would cost around 5.06 billion Euros.

But the French government was like, “Ha! No chance. We want 7.8 billion euros for the jets.”

So, according to the dissent note report, that’s roughly 55.6 percent more than what India’s expert negotiation team had suggested, based on detailed calculations.

Would you be happy if you knew something costs only 1 lakh rupees, but the shopkeeper says that he wants 1.5 lakh rupees for it?

But anyway, the CAG report said that this was grossly underestimated and that according to the revised figures, which adjusted the original 2007 deal’s price to 2015’s rates, India actually got a better deal, at approximately 2.86 percent less than the price they would have paid. The dissent note had also flagged the fact that France had agreed to a fixed price formula for the deal, not a price escalation formula, but that this changed in the 2015 deal.

That aside, the dissent note also added other small, inconsequential details about how the delivery schedule that France had set was impractical and that Dassault would not be able to provide the 36 jets given their pace of production.

Oh also there was also another report in The Hindu about how the Modi govt waived a number of clauses in the agreement which would have acted as checks against corruption and using undue influence. But oh, well.

To wrap this whole thing up neatly, the French government didn’t give a sovereign guarantee for Dassault in the Rafale deal. It just gave a Letter of Comfort.

Why is this problematic? Well, because a sovereign guarantee creates a legal obligation that the govt will have to fulfil if Dassault Aviation fails to deliver on the contract.

Instead, France gave India a Letter of Comfort. What’s a letter of comfort? Well it’s far from comforting. It’s basically creates a moral obligation to India that says, “There there, we promise the deal will happen as we’ve planned.”

That’s it. In many cases, a letter of comfort isn’t even legally binding.

Of course, all this came out just days before the CAG report was tabled. In its report, the CAG said that the absence of a bank guarantee represents a saving for Dassault, not for India.

And to top this, the chairman of the Indian Negotiating Team, Air Marshal RKS Bhadauria said that the concerns the three senior officials had raised, had already been “suitably addressed.”

Of course, the Opposition has been understandably sceptical. Their reactions to the report have ranged from Mayawati saying that the CAG report was neither complete nor fully correct to the Congress saying that the report was the Government giving itself a clean chit.

Oh, and then, there’s Rahul Gandhi, who called the CAG report, the ‘Chowkidaar’ Auditor General Report.

We’ll be tracking all the updates as the back and forth continues. So stay tuned to The Quint for updates.

(With inputs from The Hindu)

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