Are Our Politi­cians Los­ing In­ter­est in In­dia’s De­fence?

‘After Kargil war, dur­ing which I made that fa­mous state­ment: “We shall fight with what­ever we have”, In­dia’s de­fence bud­get was raised to 2.41 per cent of its GDP. Since then, there has been a steady downslide, to 1.47 per cent this year, not count­ing th

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THE STAND­ING COM­MIT­TEE ON De­fence, headed by the Bharatiya Janata Party (BJP) Mem­ber of Par­lia­ment Ma­jor Gen­eral B.C. Khan­duri (Retd), has re­cently con­veyed to the Par­lia­ment that the “Growth in the bud­getary al­lo­ca­tion for de­fence is not suf- fi­cient and woe­fully in­ad­e­quate for mod­erni­sa­tion.” This as­sess­ment can­not be a sur­prise to any­one, ex­cept those who have stopped tak­ing in­ter­est in In­dia’s de­fence re­quire­ments. After Kargil war, dur­ing which I made that fa­mous state­ment: “We shall fight with what­ever we have”, In­dia’s de­fence bud­get was raised to 2.41 per cent of its GDP. Since then, there has been a steady downslide, to 1.47 per cent this year, not count­ing the thou­sands of crores sur­ren­dered by the Min­istry of De­fence (MoD) near an­nu­ally. So the De­fence Sec­re­tary G. Mo­han Kumar was ab­so­lutely right when he ad­mit­ted be­fore the par­lia­men­tary panel that In­dia’s mil­i­tary spend­ing for fi­nan­cial year (FY) 2016-17 is not as per the re­quire­ments of the ser­vices.

All po­lit­i­cal par­ties are los­ing in­ter­est in In­dia’s de­fence mat­ters as only 10 of the 24 had given their views in the re­port of the Par­lia­men­tary Stand­ing Com­mit­tee on De­fence Given In­dia’s in­creas­ing vul­ner­a­bil­i­ties and in­ter­na­tional de­mands to act as a net provider of se­cu­rity as a ris­ing re­gional power, the de­fence al­lo­ca­tion and ex­pen­di­ture needs to be sup­ple­mented to cre­ate the ca­pa­bil­i­ties which the armed forces will need in fu­ture

A ques­tion linked to the above-men­tioned ob­ser­va­tion would be, “Are the gov­ern­ment and po­lit­i­cal par­ties los­ing in­ter­est in In­dia’s de­fence?”

I be­lieve so. Not only the NDA regime but all po­lit­i­cal par­ties seem to be los­ing in­ter­est in In­dia’s de­fence mat­ters when one no­tices that only 10 out of 24 po­lit­i­cal par­ties had given their views in this re­port of the Par­lia­men­tary Stand­ing Com­mit­tee on De­fence.

As an armed forces vet­eran, I no­ticed two firsts in the an­nual bud­get pre­sented to the Par­lia­ment this year.

First, the Fi­nance Min­is­ter Arun Jait­ley never men­tioned the word ‘de­fence’ in his speech. I can­not re­call that hap­pen­ing in the last five decades or more. In the bud­get 2014-15, there was a cryptic ref­er­ence to the ‘Make in In­dia’ pro­gramme in de­fence self-re­liance. This year, there was not even that. To many peo­ple, this lack of men­tion would have con­veyed the im­pres­sion that In­dia’s se­cu­rity and 3,40,000 crore of In­dia’s de­fence bud­get (to­tal de­fence out­lay plus the pen­sions bill) is of lit­tle im­por­tance.

Se­cond, for the first time, the Fi­nance Min­is­ter in­cluded ‘de­fence pen­sions’ as part of the De­fence Min­istry Al­lo­ca­tion (Item No. 21 in the Sum­mary of De­mands for Grant). Till now, mil­i­tary pen­sions were never a part of de­fence bud­get. It was a sep­a­rate al­lo­ca­tion. The Fi­nance Min­is­ter in­cluded this ex­pen­di­ture as part of the de­fence bud­get prob­a­bly for two rea­sons:

To con­vey that this par­tic­u­lar item has im­pacted the rest of de­fence al­lo­ca­tion (mil­i­tary pen­sions are likely to in­crease from 60,238 crore in FY 2015-16 to 82,332 crore in FY 2016-17).

To con­vey that to­tal de­fence out­lay has been in­creased sub­stan­tially.

What is the ac­tual de­fence al­lo­ca­tion for this year? What are its im­pli­ca­tions for the armed forces? Let me an­a­lyse and state my views.

The de­fence al­lo­ca­tion sought in the bud­get es­ti­mate (BE) for the FY 2016-17 is: Rev­enue—`1,48,498.85 crore, Cap­i­tal—`78,586.68 crore, Pen­sions—`82,332.66 crore, Mis­cel­la­neous (other than armed forces)—`68,537.63 crore. On the ba­sis of BE of last year, there is an in­crease of mere 1.16 per cent. This al­lo­ca­tion does not even cover In­dia’s in­fla­tion rate and will be in­suf­fi­cient to ful­fil mil­i­tary’s ba­sic needs, let alone its mod­erni­sa­tion.

In the FY 2015-16, MoD was un­able to spend 18,295 crore out of its al­lo­cated bud­get. This in­cluded 11,595 crore from the Cap­i­tal ex­pen­di­ture, or 13.4 per cent of the funds ear­marked to pur­chase new mil­i­tary equip­ment. The rest un­spent amount was from Rev­enue ex­pen­di­ture, mostly main­te­nance re­quire­ments of the mil­i­tary. For the un­spent money, which leads to re­duc­tion in the Re­vised Es­ti­mates (RE) year after year, we can blame the Min­istry of De­fence for its cum­ber­some pro­ce­dures, and also its Fi­nance Ad­viser who takes his cues on cur­tail­ing de­fence ex­pen­di­ture from the Min­istry of Fi­nance. Usu­ally, he is seen to be more loyal to his par­ent min­istry than the one in which he is lo­cated.

For the FY 2016-17, the Cap­i­tal ex­pen­di­ture out­lay for the armed forces is 78,586.68 crore. Last year, at the BE stage, it was 85,894.44 crore. This clearly im­plies lesser money for mod­erni­sa­tion this year. Of the al­lo­cated amount, more than 80 per cent funds are ex­pected to be paid for deals which have al­ready been signed.

Lack of funds will force the De­fence Min­istry to can­cel sev­eral projects, and even with­draw some al­ready floated ten­ders. The de­lays in the re­place­ment of the army’s ob­so­les­cent weapons and equip­ment, mak­ing up of de­fi­cien­cies in fighter squadron strength of the air force and the sub­ma­rine fleet of the navy to meet fu­ture threats and chal­lenges is in­deed wor­ri­some. Sev­eral big-ticket pur­chases be­ing worked out for mod­erni­sa­tion of the army, navy and air force are likely to suf­fer. This would also af­fect our de­fence industrial sec­tor which is look­ing for ex­pan­sion and more sup­ply or­ders as part of In­dia’s ‘Make in In­dia’ pro­gramme.

Ev­ery­one knows that In­dia’s de­fence mod­erni­sa­tion had suf­fered heav­ily dur­ing the UPA regimes which or­dered probes into ev­ery charge of cor­rup­tion and black­listed sus­pect de­fence ven­dors. The black­list­ing went to such an ex­tent that at one stage al­most ev­ery de­fence in­dus­try com­pany in the world stood banned. In fact, the NDA came to power ac­cus­ing the UPA for its over­cau­tious De­fence Min­is­ter A.K. Antony ne­glect­ing the mil­i­tary, and promised to make In­dia stronger.

The main­te­nance (Rev­enue) ex­pen­di­ture is no less a worry. The al­lo­ca­tion this year

1,48,498.85 crore which is an in­crease from last year’s BE 1,37,153.03 crore. The fact is that this ex­pen­di­ture has been bloat­ing year after year and thus skew­ing main­te­nance ver­sus mod­erni­sa­tion ra­tio in de­fence al­lo­ca­tion. Ideally, it should be about 50:50 for the air force and navy, and about 65:35 for the man­power-in­ten­sive army.

In the past, when­ever Rev­enue ex­pen­di­ture over­shot the bud­geted al­lo­ca­tion, there was a ten­dency to dip into the Cap­i­tal ex­pen­di­ture. This year, with ex­tra Rev­enue ex­pen­di­ture re­quired on ac­count of 7th Pay Com­mis­sion rec­om­men­da­tions, and postPathankot at­tack ex­tra se­cu­rity mea­sures for large de­fence in­stal­la­tions, I doubt if we can come any­where close to these ra­tios next year.

I have four additional com­ments to make.

As a ra­tio of pro­jected GDP for the FY 2016-17, In­dia’s de­fence ex­pen­di­ture will be around 1.47 per cent. In com­par­i­son, China spends more than 2.5 per cent, and Pak­istan around 3.5 per cent of their re­spec­tive GDP. In­dia’s per capita ex­pen­di­ture on de­fence is less than $10, while the av­er­age ex­pen­di­ture of the top ten spenders in Asia is ap­prox­i­mately $800. Given In­dia’s in­creas­ing vul­ner­a­bil­i­ties and in­ter­na­tional de­mands to act as a net provider of se­cu­rity as a ris­ing re­gional power, the de­fence al­lo­ca­tion and ex­pen­di­ture needs to be sup­ple­mented to cre­ate the ca­pa­bil­i­ties which the armed forces will need in fu­ture.

The in­abil­ity to spend al­lo­cated cap­i­tal mod­erni­sa­tion bud­get must be rec­ti­fied ur­gently. We should re­con­sider ‘non-lapsable, roll-on al­lo­ca­tion’ for de­fence cap­i­tal bud­get. This was in­sti­tuted by the last NDA Gov­ern­ment un­der Atal Bi­hari Va­j­payee.

While seek­ing additional re­sources from the gov­ern­ment, it is also the re­spon­si­bil­ity of the Min­istry of De­fence and the armed forces to con­trol the ever bloat­ing Rev­enue ex­pen­di­ture. This re­quires stricter check over man­power ex­pan­sion, with greater use of tech­nol­ogy where nec­es­sary. With greater in­te­gra­tion of ser­vices, we can cut down du­pli­ca­tion (some­time trip­li­ca­tion) of our non-com­bat re­sources.

In or­der to meet Stand­ing Com­mit­tee’s ob­ser­va­tion on greater ef­fi­ciency of spend­ing, we should also in­sti­tute a ‘tech­ni­cal au­dit’ ev­ery five years to check if the al­lo­cated Cap­i­tal re­sources have been utilised op­ti­mally for the de­sired ca­pa­bil­i­ties.

In his speech to the Com­bined Com­man­ders in De­cem­ber 2015, Prime Min­is­ter Naren­dra Modi said, “In a world of rapid changes, In­dia faces fa­mil­iar threats and new ones. Our chal­lenges cover land, sea and air at the same time. It in­cludes the full range, from ter­ror­ism to con­ven­tional threat to a nu­clear en­vi­ron­ment. Our re­spon­si­bil­i­ties are no longer con­fined to our borders and coast­lines. They ex­tend to our in­ter­ests and cit­i­zens, spread across a world of wide­spread and un­pre­dictable risks.” Surely, that could not be mere rhetoric. There is a feel­ing amongst large num­ber of armed forces per­son­nel that the gov­ern­ment, par­tic­u­larly the Fi­nance Min­is­ter, was up­set with some armed forces veter­ans’ con­tin­u­ing ag­i­ta­tion over ‘One Rank One Pen­sion’ is­sue de­spite the gov­ern­ment con­ced­ing most of their de­mands. My ap­peal to the gov­ern­ment is that whether that is true or not, it must not come in the way of the armed forces mod­erni­sa­tion.

IL­LUS­TRA­TION: ANOOP KAMATH

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