The much-awaited Comptroller and Auditor General (CAG) report on the Rafale multi-role fighter aircraft deal between India and France has been accessed by Republic TV, putting a full-stop to the allegations of Rahul Gandhi over pricing - which he had made a major poll-plank in the Congress' efforts to highlight corruption by the Central government.
1. Unrealistic benchmark prices in original RFP:
As per the CAG, the negotiating team made a price estimation that was 57% lower than the initial offer of the French team. The report says: "As the negotiating team was already aware of both the previous unrealistic benchmark pricing as well as the commercial offer, they could have estimated the benchmark price more realistically. Audit also noticed that this was the second time (first time in November 2011) that an unrealistically low benchmark price was fixed."
This also led to the issue where man-hours required by HAL to manufacture in India were 2.7 times that suggested by Dassault, which led to a stall in negotiations then. Dassault also refused to take guarantee for planes manufactured at HAL.
2. RFP withdrawal: The CNC recommended in 2015 that the RFP be withdrawn for no resolution to the twin problems of man-power costs and non-guarantee of aircrafts to be manufactured in India
3. Price: The IGA (inter-governmental agreement) turned out to be 2.86% cheaper than what the price could have been if the old contract was signed. India-specific enhancements turned out to be 17.08% cheaper than what the price could have been if the old contract was signed. Here's a breakdown of the various components of the contract and what is cheaper or dearer between the NDA contract and the UPA negotiations:
On overall prices:
On India-specific enhancements:
4. Why the contract that has been signed is better:
In an IGA, the buying government gets same benefits which vendor gives to its own government.
The delivery of planes would be faster by a month in the current IGA as compared to what the timelines could have been if the old contract was signed: