De­fence bud­get 2017-18


De­fence has been al­lo­cated ` 2,74,114 crore ($42.17 bil­lion) for fis­cal year 2017-18. This does not in­clude the pen­sions bill which it­self is close to ` 85,000 crore per an­num. At the same time, while pen­sions are ex­cluded in this al­lo­ca­tion, en­hanced salaries on ac­count of the Sev­enth Cen­tral Pay Com­mis­sion (CPC) it­self con­sume con­sid­er­able funds. Al­ready In­dia’s ex­penses on op­er­a­tions and main­te­nance are drop­ping, while ex­penses on salaries have risen.

It may be re­called that de­fence al­lo­ca­tion for FY 2015-16 and FY 2016-17 were same ` 2,46,727 crore. Me­dia, there­fore, is quick in call­ing the al­lot­ment of ` 2,74,114 crore for FY 2017-18 as a 6.2 per cent hike. How­ever, it would be naïve to not view this de­fence al­lo­ca­tion in the back­drop of the ru­pee de­pre­ci­a­tion cou­pled with yearly in­fla­tion rates of de­fence pro­cure­ment, which would per­haps make any hike a mis­nomer. It may be noted that de­fence bud­get al­lo­ca­tion of ` 2,46,727 crore in fis­cal 2015-16 also stood at $40 bil­lion, while ` 2,46,727 crore in last fis­cal (2016-17) went be­low $40 bil­lion in ac­tual terms.

The hike re­quired in fis­cal 2017-18 was much more con­sid­er­ing the rapidly ex­pand­ing mil­i­tary prow­ess of China and a per­pet­u­ally bel­liger­ent Pak­istan, plus the ex­pand­ing China-Pak­istan col­lu­sive threats to our na­tional se­cu­rity. Un­for­tu­nately, pol­icy mak­ers in In­dia find it dif­fi­cult to ac­knowl­edge that econ­omy and de­vel­op­ment hinges on se­cu­rity and de­fence pre­pared­ness. Be­sides, some nur­ture il­lu­sion there never would be con­flict. That is the rea­son why de­vel­op­ment of our border in­fra­struc­ture, espe­cially in the North East, re­mains pa­thetic; 16 strate­gic rail­ways are still on pa­per.

It is dis­tress­ing that ` 35,000 crore was un­spent in this year and the spend­ing was re­duced in the re­vised es­ti­mates (RE). Whether this is on ac­count of red tape or other rea­sons, it is crim­i­nal con­sid­er­ing the poor state of equip­ping of the armed forces even at the cut­ting-edge. Sig­nif­i­cantly, the Par­lia­men­tary Stand­ing Com­mit­tee on De­fence had noted in April 2015 that “such un­der-spend­ing leads to a sit­u­a­tion where the prepa­ra­tion of de­fence forces is nowhere near the tar­get”. The Com­mit­tee called for a “non-lapsable and roll-on al­lo­ca­tion” fund for 5-10 years for de­fence equip­ment. Such a non-lapsable fund, ad­min­is­tered by ex­perts with strict con­trols on time­lines, would re­duce bu­reau­cratic hur­dles and be more at­tuned to prac­ti­cal re­al­i­ties.

Even dur­ing the pre­vi­ous NDA Gov­ern­ment,

Jaswant Singh as De­fence Min­is­ter had re­com- mended that the un­spent funds of de­fence bud­get must be al­lowed go into the next fi­nan­cial year. Un­for­tu­nately, the gov­ern­ment has paid no heed to these rec­om­men­da­tions. The de­fence bud­get in­cludes a cap­i­tal out­lay of ` 86,488 crore for new equip­ment, weapons, air­craft, naval war­ships, army ve­hi­cles, which is 9 per cent hike over the cur­rent fis­cals cap­i­tal out­lay at ` 78,586 crore but it hardly is enough to bridge the ex­ist­ing crit­i­cal de­fi­cien­cies and much needed mod­erni­sa­tion, even as the pow­ers that be refuse to ac­knowl­edge the widen­ing gap be­tween the PLA and the In­dian armed forces. Much of the cap­i­tal out­lay for the In­dian Air Force will be con­sumed by the high cost Rafale air­craft. The al­lo­ca­tion for new weapons, equip­ment and sys­tems may have been in­creased, but not the quan­tum jump that is needed to rapidly bridge the gap. In back­drop of in­creased Chi­nese bel­liger­ence, even Ja­pan that has no land border with China has passed a de­fence bud­get of $43.6 bil­lion for this year.

In our case, the de­fence al­lo­ca­tion is much be­low what was ex­pected, partly sul­lied per­haps be­cause of slow­down of the econ­omy due to de­mon­eti­sa­tion. But the fact re­mains that we need a fresh ap­proach to de­cide upon de­fence al­lo­ca­tions, even though there ap­pears to be no move to de­fine a co­he­sive na­tional se­cu­rity strat­egy. Al­lo­cat­ing the de­fence bud­get or for that mat­ter draw­ing up of the Long-Term In­te­grated Perspective Plan (LTIPP) in ab­sence of a na­tional se­cu­rity strat­egy and com­pre­hen­sive de­fence Re­view is bad. But the true state of de­fence re­mains hid­den and the true im­pact of de­fence al­lo­ca­tions re­main un­known. Our ex­ist­ing pro­ce­dure for evolv­ing the de­fence bud­get in­volves: Ser­vices for­ward­ing their wish lists to HQ IDS; HQ IDS for­ward­ing the com­piled list to the Min­istry of De­fence (MoD); MoD for­ward­ing same to the Min­istry of Fi­nance (MoF) af­ter some tin­ker­ing, and MoF im­pos­ing ar­bi­trary cap with­out con­sid­er­ing op­er­a­tional im­pli­ca­tions.

It would be pru­dent for us to go in for prebud­get pre­sen­ta­tions by the Army, Navy and Air Force to the Par­lia­men­tary Stand­ing Com­mit­tee on De­fence (akin to pro­ce­dure in the United States) giv­ing their ex­ist­ing op­er­a­tional ca­pa­bil­ity, bud­get de­mand, and what would be the ca­pa­bil­ity if that de­mand was met. The Com­mit­tee then should project to the gov­ern­ment what the de­fence al­lo­ca­tions for next fi­nan­cial year should be, giv­ing their rea­son­ing. The Com­mit­tee re­port would also be on record which would also take into con­sid­er­a­tion the geopo­lit­i­cal re­al­i­ties and the op­er­a­tional perspective.

Our ex­ist­ing pro­ce­dure for evolv­ing the de­fence bud­get in­volves: Ser­vices for­ward­ing their wish lists to HQ IDS; HQ IDS for­ward­ing the com­piled list to MoD; MoD for­ward­ing same to the MoF af­ter some tin­ker­ing, and MoF im­pos­ing ar­bi­trary cap with­out con­sid­er­ing op­er­a­tional im­pli­ca­tions



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