Defence Notes

New Delhi, 3 March 2010

Defence Budget

MEASLY HIKE, LACKS PUNCH

By Col. (Dr.) P K Vasudeva (Retd)

After the huge 34 per cent jump in allocation in 2009-2010 to plug operational gaps in the wake of the 26/11 terror attack in Mumbai, the defence outlay got a measly 3.98 per cent this fiscal 2010-2011, higher than last year but the lowest in seven years. Though the defence budget for 2009-10 had increased by 34 per cent over the previous year—it was one of the highest raise in India’s history—yet a large part of this increase went towards the higher salaries recommended by the Sixth Pay Commission. And while the operating expenditure of the Armed Forces has been on the rise, the capital expenditure declined last year. This does not bode well for defence modernisation.

If the revised estimates of last year are taken into account, then the budget has a slightly healthier 8.13 per cent hike. For the record, the 2010-2011-defence outlay stands at Rs. 1,44,344 crore compared to last year’s allocation of Rs. 1,41,703 crore.

With this measly hike of about four per cent, the modernisation of the 13-lakh strong Armed Forces is going to suffer seriously in the absence of concrete long-term strategic plans to systematically build military capabilities. This when the threat perception from both China and Pakistan is growing. India not only has to evolve an Israeli model if it desires to obviate threat perception from its adversaries but its defence outlay needs to be trebled. “Needless to say, any additional requirement for the nation’s security will be provided for,” said Finance Minister, Pranab Mukherjee, which is the only saving grace.

The capital outlay, largely meant for acquiring new weapon systems and platforms, is pegged at Rs 60,000 crore this fiscal, which represents a 9.4 per cent jump over last year’s allocation of Rs 54,824 crore. It becomes a robust 25.4 per cent if compared to revised estimates at Rs 47,824 crore of 2009-10. Out of Rs 60,000 crore of capital outlay, the Indian Air Force has got the biggest chunk of Rs 24,954 crore. The Army got Rs 16,969 crore, Navy Rs 2,972 crore, Naval Fleet Rs 6,950 crore and Naval Dockyard Rs 417 crore.

An explanation offered is that the IAF is set to purchase some 126 multi-role fighters. It has floated a tender for attack helicopters and also transport helicopters besides new training aircraft for its fighter pilots. Additionally, it is  set to purchase critical equipment for air defence.

This apart, the major equipment that could come up for purchase includes the sea-borne aircraft carrier Admiral Gorshkov and the large lending ships. The Army will be buying heavy vehicles worth Rs 1074 crore, while Rs 4,722 crore has been allocated for its construction activity.

However, the recurring ghost of unspent funds and defence deal scams  continues to haunt the Armed Forces, with the defence ministry stifling red tape and cumbersome procurement procedures. It has failed to spend Rs 7,000 crore from 2009-2010 capital outlay. That is a sign that the Armed Forces, worrying more on operating costs than long-term investments, are not being pushed to improve their teeth-to-tail ratios. Of the three Services, the  Navy is the only one acting against this trend. In the absence of any strategic guidance, modernisation plans will in all likelihood continue to lag behind.

Indeed, the entire planning process needs a complete overhaul. From the lack of adequate number of submarines, obsolete radars and outdated air defence weapons to the failure to induct new 155 mm artillery Howitzers since the Bofors case of the mid 90s, the Forces have had several gaps in operational capabilities. This despite the fact that the nation has spent over $50 billion for arms acquisitions since the 1990 Kargil conflict.

If the projected GDP for 2010-1011 is taken, the country’s defence expenditure is a mere 2.12 per cent, less than the 3 per cent demanded by the Armed Forces and strategic experts since a long time. For the past two decades, India’s military expenditure has hovered around 2.75 per cent of the GDP. 

On a broader note, there is a need for India to strengthen its diplomatic and military capabilities in consonance with its rise as an economic power. Contrary to those who argue in favour of spending more on development instead of defence say, the “guns versus butter” debate is spurious: Unless adequate provisions are made for defence, no State will be able to pursue its developmental agenda. This is even truer in India, which faces a unique security environment with two of its “adversaries” straddling it on both sides of its borders and problems on all sides of its periphery. Compared with China’s 7 per cent and Pakistan’s 5 per cent of the GDP defence expenditure, India’s defence budget continues to be very low.

Finally, the issue of spending on defence should also require taking a closer look at the foreign ministry’s budget. That budget may have increased by 24 per cent last year, but the Indian Foreign Service needs a major revamp; it continues to be extremely small, compared with the expanding interests of the country, in almost every part of the world. Defence and diplomacy are two sides of the same coin and India cannot afford to ignore either of these.

There is no substitute for strategic thinking and institutional effectiveness in foreign and security policymaking. We may well need a blue ribbon commission to inquire into this. Otherwise, budgets will come and go without adequately serving Indian security interests.

In order to make the workforce more competitive, the government has curtailed certain tax benefits, rewarding sufficient autonomy to help them compete and create a level-playing field so that the private sector comes forward for defence production via the joint venture route. The Defence Minister, A K Antony, has indicated that the government is examining all pros and cons before it sets a time-frame for the Defence Production Policy in which the provisions would be incorporated to seek indulgence of private sector for defence exports with minimum government approvals. In the absence of the policy, exports of defence articles, equipment, component and finished products are cumbersome but something would have to be done on this front.

Defence experts feel that a clear-cut road map for corporatisation of ordnance factories should be seriously considered. Without it the country’s defence production will remain import-oriented and the factories and its workforce would not be competitive enough.

Keeping in view the threat perception there is a dire need of building roads, railway lines and airports for the jet fighters’ operations right up to the borders as has been done by China. Pakistan is trying to settle its ex-servicemen nearer to the borders and arming them for better security alerts. Thus, India must be strong enough like Israel to counter any attack of offensive from our adversaries. Time to get started. –INFA

(Copyright, India News and Feature Alliance)