Dr PK Vasudeva
Finance Minister Arun Jaitley announced on 28 February a modest 7.9 per cent increase in the country’s defence spending for the fiscal year 2015-16, suggesting that it will move only gradually with the military’s long wish list for fighter jets, submarines, ships, artillery and other defence equipment.
After years of neglect, India is trying to narrow the military gap with China, which has been building up its fleet of ships and submarines making forays in the Indian Ocean. Beijing is expected to authorise robust 2015 defence spending this coming week despite its slowing economy, largely to beef up the navy with anti-submarine ships and develop more aircraft carriers beyond the sole vessel in operation.
Last year, the two giant neighbours were locked in a standoff on their disputed Himalayan bordersin Ladakh and Arunachal that cast a shadow on President Xi Jinping’s first summit meeting with Prime Minister Narendra Modi who cooled down the belligerent atmosphere. Resultantly, economic ties have rapidly expanded between the two countries and Modi is expected to visit China later in 2015.
The defence budget was increased by 10.95 per cent to Rs 2.46 lakh crore for the next fiscal as compared to the revised estimates of Rs 2.22 lakh crore for 2014-15 as the Government focuses on ‘Make in India’ to curtail over-dependence on imports. The defence budget accounts for nearly 13.88 per cent of the total Central government expenditure for the year 2015-16, which is Rs 1,777,477.04 crore. However, it is 1.28 per cent of the GDP, which is the lowest in the world. It has to be raised to 3 per cent of the GDP keeping in view the threat perception from our adversaries Pakistan and China and also based on the recommendations of the Parliamentary Committee on defence.
While the Government had last year allotted Rs 2.29 lakh crore in the Budget, it was revised to Rs 2,22,370 crore. The defence budget for 2015-16 represents a growth of about 7.74 per cent over last year’s budget estimates.
Finance Minister has earmarked Rs 94,588 crore for military modernisation, which works out to 38 per cent of the total defence outlay. Incidentally, Rs 12,622 crore meant for modernisation last year remained unspent. Of this, Rs 5,992 crore was diverted towards revenue spending. India is seeking to fast track its military modernisation and has a number of pending deals ahead like the multi-billion contracts for 126 multi-role combat aircraft contract.
The other major acquisitions expected to be finalised include the deals for 22 Apache combat choppers, 15 Chinook heavy-lift helicopters, 197 light helicopters, 145 Ultra-light Howitzers and besides new submarines and vessels for the Indian Navy. The Navy needs new submarines and stealth ships to counter the Chinese presence in the Indian Ocean, which New Delhi has long seen as its sphere of influence.
In 2010, India overtook China as the world’s biggest importer of defence equipment, according to the Stockholm International Peace Research Institute (Sipri). Indian Air Force, Army and Navy have placed orders worth Rs 83,858 crore from 2011 to the last fiscal.
“So far, we have been over dependent on imports, with its attendant unwelcome spin-offs,” Jaitley stated, adding that Government has already permitted FDI in defence from 26 to 49 per cent. He said this was done so that the Indian-controlled entities also become manufacturers of defence equipment not “only for us, but for export”.
Speaking on the steps taken to boost the defence sector, the Finance Minister stated that the Government is working towards self- sufficiency through the ‘Make in India’ programme in defence equipment including aircraft and added that the Government has been both transparent and quick in making defence equipment related purchase decisions.
But the limited rise in the military budget — three-quarters of which is spent on maintaining the world”s third largest standing force – means only some new weapons will be ordered this year. The modernisation of defence forces has been neglected over the years that may have serious repercussions like what we saw in 1962 Chinese incursion.
Out of the countries that spend maximum on defence equipment the US stands at number one with an expenditure of $581 billion followed by China $132.4 billion and India is at 8th position with an expenditure of $45.2 billion which is clearly not adequate considering the threat perception from our adversaries. The worst is shortage of young leadership (junior officers 15,000) in the Armed forces for which the country is showing a complete neglect. Where is the manpower to fire those modern weapons?
Despite repeated assurances, the much-talked-about “one rank, one pension” (OROP) scheme found no mention in the Union Budget on 28 February stuck as it is between the Services and the Defence Ministries. The Armed forces have felt highly upset and demoralised with the silence of Finance Minister on the announcement of OROP.
“I have already in the last Budget said that we are going to implement ‘one rank, one pension’. This need not be stated on every occasion. We are completely committed to it,” he told presspersons in response to a question. Asked for the reasons for the delay, he said: “The methodology of calculating OROP is pending between the Services and the Defence Ministries,” and added that once formulated, it would be implemented. Defence Minister Manohar Parrikar had earlier assured that the OROP scheme would be allocated funds in this Budget and cleared soon.
Undeniably, the bureaucracy is the biggest hurdle for the implementation of well-deserved OROP because it also wants similar arrangements in its service conditions, which is not justified. Doesn’t it reflect the decision making of the political leadership? Doesn’t it show that the political leadership is weaker than the bureaucratic leadership in the country?
Information Handling Services (IHS), the leading source of information, insight and analytics, has predicted that India would become the fourth biggest defence spender by 2020, behind the US, China and Russia, surpassing France, Japan and the UK. IHS Jane’s Defence Budgets projects that India’s defence spend will reach $65.4 billion in 2020 despite cuts announced by the Government recently, caused by the challenging economic and fiscal climate. This obstacle is expected to wane over the next three years, with IHS expecting India’s GDP growth to recover to rates of around 8 per cent by 2015 – allowing India’s plans for increasing defence spend to recover from 2015 to 2020.
Based on current projections, IHS Jane’s Defence Budgets expects the Indian defence budget, including related pensions obligations, to reach $55.6 billion over the five years. Will Finance Minister please kindly make a note? INFA
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