Defence Notes

New Delhi, 19 March 2012

Defence Budget

HIGH ON RHETORIC, WEAK IN MODERNISING

By Col (Dr) PK Vasudeva (Retd)

It is a matter of grave concern that India is not paying sufficient attention towards its defence and security needs. The reason why it has serious problems with Pakistan vis-à-vis the Line of Control (LoC) in J&K and the Line of Actual Control (LoAC) along the McMahon Line (Arunachal and Ladakh) against China.

The neglect of security concerns was once again underscored by the latest defence outlays in the General Budget presented by Finance Minister Pranab Mukherjee Thursday last. True, the budget gives a push to rapid military modernization by hiking military spending by over 17.63% (1.9% of GDP) to Rs.1,93,407 crore. He also raised capital expenditure to Rs.79, 579 crore ($17.5 b), a 15.7% hike from last year’s capital allocation of Rs.69,199 crore ($15 b).

However, in real terms, this increase amounts to Rs.28, 992 crore ($6.5 b) in the total outlay for defence for 2012-13 compared to Rs.1,64,415 crore ($36 b) for the previous year. Worse, if one adds inflation and the slide in the rupees value India’s military’s modernisation budget has effectively been reduced for the first time in decades.

More worrying, India’s dependence on foreign weaponry could continue as the Research& Development (R&D) expenditure has been slashed in real terms. Further, as on an average, more than two-thirds of any year’s capital budget is pre-committed towards annual instalments for defence contracts concluded earlier. Specially, as weapons platforms are often paid for over a decade and nearly 30% of any year’s capital budget goes towards new contracts.

Importantly, the biggest worry is the Army’s slowdown in modernisation. Think. The Army has got the lowest share of the capital budget, only Rs 18,228 crore for modernisation. And it already heavily over-spent on purchases of aircrafts, aero-engines and heavy vehicles in the last fiscal. And the nearly Rs 2000 crore earmarked for ‘other projects’ like artillery purchases could not be utilised. Besides, a proposal to buy 145 ultra light howitzers from the US under a Government-to-Government sale is progressing. The purchase of 1,600 numbers of 125 mm smooth barrel T-72 tanks is also overdue.

The Navy got a significant amount Rs 13,617 crore for modernisation of its fleet with several new warship acquisitions in the pipeline. It is budgeting for the impending contract for Project 17A frigates to be built at the Mazagon Dock in Mumbai and the Garden Reach Shipbuilders & Engineers, Kolkata. It is also making annual payments for several ongoing warship programmes: Project 28 anti-submarine corvettes, Project 75 Scorpene submarines and Project 15A and 15B destroyers. In addition, it is paying Boeing for the P8I Poseidon multi-mission maritime aircraft (MMA) that are being built in the US.

Inexplicably neglected, the navy, the fulcrum of the country's maritime influence from Hormuz to Malacca Straits, has just 132 warships with 14 ageing submarines. Around Rs 3 lakh crore are to be invested over 15 years to transform it into a new 'multi-dimensional navy'. The accent is on reviving submarine Project 75 India in tandem with the French Project 75. 

The defence outlay for the Indian Air Force is Rs 29,853 crore for modernisation. India is on the verge of signing a whopping $20 billion contract for 126 Rafael medium multirole combat aircraft which will come into service by 2016 in tandem with 250 fifth generation fighters jointly produced with Russia in 2018 apart from a $600 million deal for 75 Pilatus PC-7 basic trainers. It is also making annual payments for the earlier contracts for the American C-130J Super Hercules and C-17 Globemaster III transport aircraft and upgrade of 51 Mirage-2000 combat jets. 

Shockingly, the Defence R&D Organisation (DRDO), India’s main source of indigenous defence systems, must also make do with less. In rupee terms, the R&D allocation of Rs 4,640 crore for 2012-13 just about matches last year’s R&D spend of Rs 4,628 crore. 

Worse, compared to India, China, which used to be the largest importer of arms during the last decade, has built admirable indigenous capability by heavily investing in its R&D and even poaching scientists from Russia. But for reasons best known, our services take a greater slice of the pie for procurement from abroad instead of working closely to make a success of the indigenously developed tanks and aircrafts. For instance, Tejas LCA (Light Combat Aircraft) and Arjun (Main Battle Tank) despite good showing in trials have yet to be inducted.

Nevertheless, a silver lining is the encouraging news is the announcement for setting up joint ventures by defence PSUs in a public private partnership (PPP) mode to boost indigenous defence production, particularly state-of-the-art equipment. 

Significantly, earlier this month, China had announced that it would spend $106 b on its military in 2013. Defence experts estimate that Beijing actually spends 50-100% more than the declared figure. India in contrast, also has a booming economy but it has been niggardly in its defence expenditures, as defence expenditure is made subservient to political-populist schemes.

Capital acquisition of critical military hardware is delayed for decades due to political indecision, bureaucratic lethargy and other considerations, which view capital acquisitions of critical military equipment from abroad with extraneous perspectives.

Scandalously, India’s defence expenditure since 1950 has been only 1.7%-2.3% of its GDP. Except after the Chinese debacle in 1962 and Kargil operations in 1999 when it was raised from 2.1% to 4.5% of GDP and from 1.8% to 2.9% of GDP respectively. 

Recall, faced with acute fiscal distress, huge shortfall in tax collection and disinvestment along-with miscalculation of subsidies, the Government had decided earlier on an unusual step: Cutting the defence budget for this fiscal. The Centre had proposed a cut of "a few thousand crores" in the defence budget of 2011-12.  The Ministry of Defence had therefore ordered the three Services to surrender Rs 3,052 crore unspent money in March 2012.

Alarmed by this unprecedented warning of the Defence Ministry, Chief of Army Staff  General V.K. Singh immediately wrote a letter to Defence Minister Antony asserting that the war-waging capability of the Army has been “seriously degraded” with the Government dragging its feet on critical procurements and policy measures. The detailed letter highlighted the depleting ammunition reserves and the slow pace of modernisation, especially in areas like artillery, armour tanks and air defence pending for over five years. 

As a result of the Army Chief’s letter, the Defence Minister convened a defence review committee meeting comprising the three Chiefs, Defence Secretary and National Security Advisor. The three Chiefs re-emphasised the importance of modernisation of the armed forces keeping in view the lurking threat perception and replacement of depleted age-old defence equipment. The Chiefs may have won the day but the Budget is woefully low.

Conclusively, India will not be able to militarily checkmate China. In 1962, China humiliated India due to lack of Indian defence preparedness. In 2012, given the existing political and bureaucratic mind-sets and the slippage that has taken place in defence outlays in the last two decades, India risks a similar repeat of 1962, a military debacle (Notwithstanding, the Armed Forces making-do with military hardware available to defend its sovereignty). ---- INFA

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