Defence Budget and its impact

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Defence Budget and its impact

The Army, Navy and Air Force continue to grapple with critical operational gaps. It is disheartening that the Government has squeezed the defence Budget. This may have serious consequences

While the Government has increased the defence Budget by 5.91 per cent for fiscal year 2018-19 to Rs 2,95,511.41 crore, allocation is estimated at around 1.58 per cent of the gross domestic product (GDP) — the lowest since 1962, once again dashing the hopes for any major jump in military modernisation despite heightened tensions confronting Pakistan and China along the unsettled borders. An additional amount of Rs 1,08,853.30 crore has been provided for defence pensions. The defence Budget, which will account for 12.10 per cent of the total Government expenditure, is 7.81 per cent more than the Rs 2,74,114.12 crore announced in the last Budget for fiscal year 2017-18 — the figure was later revised to Rs 2,79,003.85 crore. Moreover, the defence Budget includes a capital outlay of just Rs 99,563.86 crore for new weapon systems and modernisation, which is dwarfed by the revenue expenditure (day-to-day running costs, salaries etc) of  Rs 1,95,947.55 crore and expenditure on pensions. 

Annual defence Budgets have shown a discernible trend of declining modernisation outlays for new projects, with almost 80 per cent of the outlays earmarked for “committed liabilities” (installments for arms deals inked in earlier years) and skewed revenue to capital expenditure ratio. This has meant that the Army, Navy and Air Force continue to grapple with critical operational gaps on several fronts ranging from small arms, guns, howitzers, fighters, and submarines to helicopters and also other defence equipment.

On his part, Finance Minister Arun Jaitley declared that the Government was focusing on developing connectivity infrastructure in border areas to secure the country’s defences. “Rohtang tunnel has been completed to provide all-weather connectivity to the Ladakh region. Contract for construction of Zojila Pass tunnel of more than 14 kilometer is progressing well. I now propose to take up construction of tunnel under Sela Pass (in Arunachal Pradesh),” he said.

“Our Armed Forces have played a stellar role in meeting the challenges we have been facing on our borders as well as in managing the internal security environment both in Jammu & Kashmir and the North East. I would like to place on record our appreciation for the efforts and the sacrifices made by the three services in defending the interests of the nation,” he added.

As per the 13th Defence Plan, Rs 12,88,654 crore has been projected for the capital outlay, while Rs 13,95,271 crore for revenue expenditure. With an eye firmly on China, there is also a separate section in the plan on the “capability development” of the strategically-located tri-Service Andaman and Nicobar Command, which was set up in October 2001 but has suffered from relative neglect, lack of infrastructure and turf wars due to shortage of funds.

The Government will develop two defence industrial production corridors and bring out an industry-friendly military production policy to promote defence manufacturing in India. Jaitley said the Government would also bring out an industry-friendly “defence production policy 2018” to promote domestic production by the public sector, private sector and Micro, Small and Medium Enterprises (MSMEs). The Minister said private investment in defence production had been opened up, including liberalising foreign direct investment.

Defence Budget is utilised to meet revenue expenditure and capital expenditure. India is a growing superpower, which is surrounded by enemies Pakistan in the west and China in the north. Additionally, India has to fight terrorism and insurgency in Jammu & Kashmir and North East, so defence Budget must fulfill the needs of our forces. The Infantry, which is the ‘queen of battle’, has acute shortage of small arms like assault rifles, sniper rifles, sten guns, light machine guns and anti-tank guided missiles. In small arms, Indian Small Arms System Rifles (INSAS) need to be replaced with modern assault rifles. Currently the Army is using AK - 47’s and INSAS. The personal kit of an Indian soldier, which includes bulletproof jackets, helmets and shoes, needs to be replaced with lighter kit.

The Army has once again sounded the alarm about its critical operational deficiency in the field of anti-tank guided missiles (ATGMs) 68,000 and 850 launchers, which are crucial for the infantry to halt advancing enemy tanks in the plains as well as guard the “active” line of control with Pakistan. The Army is asking the Government for the emergency induction of at least some of these “tank killers” till the indigenous man-portable systems being developed by the Defence Research and Development Organisation (DRDO) become a reality.

As far as the Indian Air Force (IAF) is concerned, the picture is not too bright either. There is a major shortage of fighter jets. Currently , we have 33 squadrons of fighter jets, whereas IAF is authorised 42 fighter squadrons. This figure will reduce further as MIG fighter jets will be decommissioned soon. The Government had signed a deal to procure 126 French fighter jets, Rafale 36 of these fighter jets will be delivered by 2019 in the ‘ready to fly’ and rest 90 of them will be manufactured in India by Hindustan Aeronautical Ltd. The induction of indigenous built Tejas will also narrow the gap, but this aircraft needs improvement to match the requirements of IAF. 

The picture is equally gloomy in the Indian Navy. There is a shortage of submarines. We have currently 14 submarines in operation; half of them have completed their 75 per cent of the service. INS Kalvari has been commissioned into the Navy under project-75 and five more submarines will be inducted under the same projection the coming years. We need to have at least 24 submarines. Currently, we have only one aircraft carrier along the western coast, but we need another aircraft carrier along the eastern coast. If we want the Navy to be a ‘Blue water Navy’, attention needs to be paid on modernisation of the Navy.

More worryingly, allocations made for the maintenance of equipment currently in use is also inadequate. Similarly, allocation towards war wastage stock, including ammunition stock, is largely the same as last year. In addition to focus on ‘Make in India’ in defence, it is expected that indigenous design and development be undertaken by Indian industry for producing important components. Since its introduction, no development project has been signed. It has been allocated a paltry Rs 44.63 crore in assistance. This year’s Budget is also silent on policy issues like the strategic partnership scheme and defence technology fund.

Talking on the issue of underutilisation of the capital expenditure, there is an issue in terms of modernisation expense. This expense is not fully consumed year after year. Almost Rs 6000 crore was surrendered in the financial year 2016-17.  As per estimates, approximately Rs 7000 crore worth of the capital Budget has been surrendered from the 2017-18 capital expenditure.   

The defence outlay has been receding every year but for 2018-19 it has been the lowest 1.58 per cent of the GDP  since 1962, which is of grave concern for the Armed Forces. The Standing Committee of Defence and Analysts had recommended that the defence outlay for its modernisation should be 2.5 to three per cent of the GDP and says that under-allocation will have serious implications for battle worthiness of the forces. 

(The writer is a retired Professor in international trade)

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