Defence Minister Manohar Parrikar on Friday said that military has to cut down manpower to cut the salary bills and divert the funds for modernisation. "Flab in the military has to be cut, it could start with the Army. I have asked the Army to identify the areas, it will take time and cannot be done overnight," said Parrikar. Asked about large sums to be spent on salaries and pensions in the wake of expected decision on the Seventh Pay Commission in Parliament, Parrikar said the "expenditure is inevitable." However, he said the government was keen on rationalising the strength of the army through a process undertaken by the army itself. "We have asked Army to do the exercise," he said. Parrikar said that another way of cutting down expenditure was use of simulators in training of pilots and also drivers. On the specific question of recommendations of the Seventh Pay Commission which are under consideration of the government, Parrikar said in the Parliament that the necessary steps will be taken by the ministry after discussions over the next two-three weeks. The minister said that Rs.77,000 crore had been allocated for capital acquisition in 2015-16 and the anticipated spending was Rs 66,000 crore. He said it was for the first time that the defence ministry took stock of military sales through an account held by the US government and found that due to "ill-management of this account, slightly less than $ 3 billion piled up". "In May-June last year, we reviewed it. We have recalibrated it has come down from about $3 billion to $1.8 recalibrated it has come down from about $3 billion to $1.8 billlon," he said. He said Rs.6,000 crore had been paid last year to the US for direct military sales and the ministry had saved money from its budget allocations. "We have saved $700 to $800 million of foreign exchange," he said, adding that the ministry had been able to save about Rs.3,000 crore more through other measures.crore more through other measures. The minister said that modernisation of forces was very important for the government and contracts of Rs 1,20,000 crore had been signed during the 21 months of the Modi governmen