Keep­ing Us Out of Arms’ Way

The Economic Times - - The Edit Page - C Uday Bhaskar

In­dia’s bud­getary al­lo­ca­tion for de­fence is size­able: .₹ 3,40,000 crore in the last fis­cal year. But it re­ceives rel­a­tively lit­tle notice or re­view, which is symp­to­matic of mat­ters mil­i­tary in In­dia.

De­void of the pen­sion out­lay, the to­tal de­fence bud­get for 2016-17 was .₹ 2,49,000 crore, which is the bud­get es­ti­mate (BE). To­day, the fi­nance min­is­ter will in­di­cate how much of this bud­geted amount was ac­tu­ally spent in 2016-17. This amount is the re­vised es­ti­mate (RE).

The trend for the last two years run­ning has been that the RE has been less than the BE, and the util­i­sa­tion of the de­fence bud­get in 2014-15 and 2015-16 was 95% and 91% re­spec­tively.

The sec­ond in­di­ca­tor is that over the last three years, BE to BE, the in­crease in the de­fence bud­get from 2014-15 to the cur­rent fis­cal year as a per­cent­age of the pre­vi­ous year has been re­duc­ing from 12.4% to 7.7% to just 1% last year. In ac­tual terms, the de­fence al­lo­ca­tion over the last three years has been .₹ 2,29,000 crore, .₹ 2,46,727 crore and .₹ 2,49,099 crore.

In other words, de­spite a glar­ing in­ven­tory de­fi­ciency for the three armed forces, In­dia’s higher na­tional se­cu­rity man­age­ment has not al­lo­cated the nec­es­sary funds re­quired. Or worse, has not utilised the amount bud­geted in an ef­fec­tive man­ner.

One more trend in­di­ca­tor pro­vides the over­all con­tex­tual frame­work for In­dia’s de­fence bud­get al­lo­ca­tion while also il­lus­trat­ing the pri­or­ity ac­corded to this sec­tor in the larger na­tional fis­cal grid. Over the last eight years, from 2009-10 on­wards, the de­fence ex­pen­di­ture (mi­nus pen­sions) as a per­cent­age of GDP has steadily de­clined from 2.19% to 1.65%.

So, over the last three years, the min­istry of de­fence has been un­able to utilise the funds al­lo­cated; the in­crease from year to year is de­clin­ing, as also the to­tal al­lo­ca­tion in re­la­tion to GDP. This is a macro-trend in­di­ca­tor that does not au­gur well for the kind of chal­lenges the In­dian mil­i­tary faces over the next decade.

Ac­cu­mu­lated ob­so­les­cence is the ma­jor chal­lenge for In­dia’s age­ing mil­i­tary in­ven­tory. Per­haps this year’s Republic Day pa­rade of­fers the most stark in­di­ca­tor. The United Arab Emi­rates (UAE) con­tin­gent led the pa­rade as guests of hon­our. The man­ner in which it was kit­ted and equipped — in­clud­ing per­sonal weapons — was a study in con­trast with our con­tin­gent.

Suf­fice it to note that the av­er­age In­dian in­fantry sol­dier is tech­no­log­i­cally one gen­er­a­tion be­hind his coun­ter­part in the spec­trum of mod­ern armies glob­ally.

The man­age­ment chal­lenge apro­pos de­fence al­lo­ca­tions gets even more mud­dled when the cap­i­tal out­lay is dis­ag­gre­gated. This head per­tains to the ac­qui­si­tion of new equip­ment and plat­forms. The track record of the last year is be­low the me­dian.

The BE for the cap­i­tal head in 201516 was .₹ 98,175 crore and the RE — the amount ac­tu­ally spent — .₹ 85,112 crore. That is, about .₹ 13,000 crore (al­most $2 bil­lion) was un­spent. This, when the Modi gov­ern­ment has pri­ori­tised mil­i­tary mod­erni­sa­tion and ‘Make in In­dia’.

Very of­ten, large sums of money are (mis)ap­pro­pri­ated from the min­istry of de­fence in the last lap of the fi­nan­cial year to bal­ance the books, as it were, and to keep the deficit down. One was wit­ness to this last-minute po­lit­i­cal pres­sure dur­ing the NDA1pe­riod when the then­de­fence min­is­ter Ge­orge Fer­nan­des was pre­vailed upon by his coun­ter­part in North Block to re­turn .₹ 8,000 crore as un­spent.

It will be in­struc­tive to note what Arun Jait­ley will an­nounce to­day — and the de­gree to which these trends have been cor­rected. Hope­fully, the last phase of this gov­ern­ment will see a tran­si­tion from arid ex­pen­di­ture con­trol to more pro­duc­tive ca­pac­ity cre­ation in the armed forces.

The writer is di­rec­tor, So­ci­ety for Pol­icy Stud­ies

We need some­thing a bit more… mod­ern

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