The budget season is approaching, all eyes would be on the Finance Ministry’s perception on the importance of national security in an era of increasing challenges. Threats are on the rise while capabilities of the armed forces on the decline. The budget would be split between an interim budget on 01 Feb and the main in Jul. The interim would indicate the Government’s directions towards the main.
This is also the election year and the government would consider catering for the common Indian, its major schemes aimed at the masses and possibly tax cuts to enhance its voter base. With multiple challenges and conflicting demands, the issue is how would the Finance Ministry Act and will the armed forces again face the cut.
Over the years defence outlay has been witnessing a drop. While strategists have been stating year after year that the defence outlay must be fixed at 3% if the armed forces are to modernize and face growing challenges, the Finance Ministry thinks otherwise. It has never considered a fixed percentage, which would benefit military planners to think ahead, evaluate their priorities and work towards modernization, knowing the quantum of funds likely to be available.
The last budget gave the armed forces its lowest allocation of 1.6%, post the 1962 conflict. An amount of Rs 21,338 crores was earmarked for modernization of the army, which requires even basic equipment like assault rifles and bullet proof jackets. This was even below the committed liabilities of Rs 29,033 crores. India has been steadily declining its defence expenditurefrom 3.18% of GDP in 1988, to its lowest last year. The world average is between 2-2.5%, with China spending 2.1% and Pak 2.36% of its GDP on defence.
In July last year, Trump shocked members of NATO when he stated on the first day of the summit that its members must double their defence spending from 2 to 4% of their GDP. While India does not need that sort of a figure, it needs to enhance its poor allocation from the last year figure of 1.6%.
The Government is aware of the security challenges the nation faces and the criticality in developing capabilities. The anguish due to shortfalls in reserves, equipment and capabilities led to the Vice Chief of the Army, General Sarath Chand stating in desperation to the Parliamentary Committee of Defence, ‘The 2018-19 budget dashed our hopes. The marginal increase barely accounts for inflation and does not even cater for taxes.’ The armed forces already have a skewed equipment profile. As against an ideal ratio of 33% in state of art, current and vintage technology equipment, they presently hold 8%, 24% and 68% respectively, a poor status for a growing military power.
Almost 83% of the budget is eaten up by the revenue share which includes salaries and maintaining existing force levels, leaving very little for modernization. The parliamentary committee also criticised the Government last week on two issues concerning poor allocation of the defence budget. The first was for rejecting the creation of a ‘non-lapsable defence capital modernization fund’, which has the concurrence of the MoD and the second was for the poor allocation in the last year.
The MoD countered the parliamentary committee and the Vice Chief’s statements claiming that there was no shortage of funds. It was the MoD playing a game of figures. While it made some allocation to the vice chiefs, the same was against the overall budget, not an additional increase. Simultaneously, with the Integrated Financial Advisor (IFA) created to clear all proposals it automatically adds a minimum of one year to all procurements.
The creation of the Defence Planning Committee (DPC) under the National Security Advisor (NSA) was aimed at coordinating defence procurements, especially since it had as its members the service chiefs, secretaries of finance, defence and foreign affairs. It made the NSA a de-facto Chief of Defence Staff (CDS), an appointment the armed forces desperately need to ensure joint planning and procurement to ensure all services develop capabilities together. It is unlikely that the DPC would have any major influence on the coming budget.
The service chiefs, aware of the shortcoming in joint planning created by the lack of CDS, knowing the hesitation within the Government to appoint one, have even projected an alternative. They suggested that the Government consider the appointment of a permanent Chairman Chiefs of Staff Committee, who would have no operational powers but be responsible for joint planning, capability development and commanding joint commands. There has been no response from the government, nor even a statement that it is considering the proposal. Despite multiple pressures from almost all strategic thinktanks and service chiefs, the Government is unlikely to announce any substantial increase in the defence share of the budget. In this era of uncertainty and multiple demands of the pie, the services themselves need to get their act together.
The Army has already in desperation announced studies to reduce its manpower in the coming years. It should have been reciprocated by the MoD in announcing reduction of manpower in defunct ordnance factories, which also eat from the same pie, but contrary to the army’s action, it announced in parliament recently, that it has no such plans. Thus, reduction of the tail by the army would have very limited impact on its share of the defence budget.
The nation lacks a strong industrial base, developing of which needs support funding from the government, especially when the private sector is to be involved. The armed forces have already selected specific equipment to be manufactured through the strategic partnership model, but without adequate budget allocations, it was shelved last year. Will it be moved forward this year remains to be seen?
For a Government which has announced that it would fight the next elections on the agenda of development, defence and self-respect of the country, its actions appear to be in the reverse. An ill-equipped armed force, due to poor financial allocation, would always encourage its neighbours to be more aggressive.
(The author is former Major General)