At a time when the Indian armed forces have been suffering to meet human resource expenses, the Government’s budget allocation is hardly sufficient. We need to be more realistic to thwart our adversaries across the borders

Unmindful of the threat perception, the defence budget for 2019-2020 has merely been increased by 6.87 per cent to Rs 3.18 lakh crore as against last year’s allocation of Rs 2.98 lakh crore, notwithstanding expectations of a major hike when China and Pakistan are bolstering their military capabilities. However, in real terms, the defence budget has gone down as the hike announced by the Government does not even cater for inflation. Officials said that the final amount allocated for the defence sector included funds set aside for Border Roads Organisation, Coast Guards and for payment of salaries and allowances to civil staff of the defence Ministry. Luckily, the total outlay does not include Rs 1,12,079 crore set aside for the payment of pensions.

The only silver lining is that interim Finance Minister Piyush Goyal said, “Additional funds, if necessary, would be provided to secure India’s borders and maintain its defence preparedness.” Out of the total allocation, Rs 1,08,248 crore has been set aside for capital outlay for the year 2019-2020 to purchase new weapons, aircraft, warships and other military hardware. Last year, the Government allocated Rs 93,982 crore as capital outlay. Under this, the Army was granted Rs 29,447 crore, the Navy was given Rs 23,156 crore and the Indian Air Force got Rs 39,302 crore. After meeting committed liabilities for procurements contracted in earlier years, there is no money left to purchase new equipment.  

The revenue expenditure, which includes expenses on payment of salaries and maintenance of establishments, has been pegged at Rs 2,10,682 crore as against Rs 1,88,118 crore for 2018-19.  Hopefully, allocation for the defence forces is to be enhanced when the new Government presents a full-fledged budget after the Lok Sabha poll.

The defence ministry said that capital outlay for the armed forces is 32.19 per cent of the Government’s total capital expenditure of Rs 3,36,293 crore and that the total defence allocation, including funds for pensions, accounted for 15.48 per cent of the total central Government expenditure.  Strategists, however, find such a small increase disturbing as it comes at a time when the armed forces is in the midst of a modernisation process, compared to its neighbours, Pakistan and China, who are already focussing on modernisation programmes.

The capital outlay announced for modernisation of the armed forces is not sufficient for the Army, Navy and the Air Force. According to reports, the Indian Army has often pointed out that almost 68 per cent of its equipment is outdated, and the world’s third largest Army needs to urgently modernise its armaments and weapons system.

Surprisingly, a major part of the Army is deployed for its secondary role — counter-insurgency operations in the North-East and Jammu & Kashmir — thus suffering a large number of casualties because of lack of sufficient small arms and equipment — assault rifles, sniper rifles, light machine guns, carbines, night vision and night firing devices, bullet proof jackets and bullet proof helmets among others.

Shortage of funds is going to impact the Navy’s procurement of projects that are in the pipeline, including frigates from Russia, minesweepers from South Korea, a second indigenous aircraft carrier which is already stuck due to lack of funds, fighter aircraft for the carrier and multi-role helicopters.

The IAF’s capital allocations have proportionally dipped from 58 per cent to 49 per cent this year. The IAF is in the process of paying Rs 5,000 crore to Rs 7,000 crore annual instalments for the purchase of ‘Rafale’ fighter jets, which have hit the planned purchases like the single-engine fighter and a range of force multipliers like aerial re-fuellers that are in the pipeline.

To ensure self-reliance, the Government is emphasising on ‘Make in India’. Undoubtedly, this is a step in the right direction but implementation needs to be fine-tuned. Capability to produce defence equipment in India is an important strategic requirement. It will result in cost savings, employment generation and will reduce  the possibility of sanctions or denial by supplier nations.

But the Budget is not the appropriate tool to encourage this. Services require suitable equipment to be ready to meet any operational contingency. Fulfillment of such requirements cannot be deferred to accommodate equipment, which is still in the design and development stage with uncertain outcomes. Since the public sector has failed to progress beyond licensed production, private sector participation must be encouraged much more than what has been done so far.

Pointing out the many success stories in the recent past, mainly due to the effort of the Defence Research and Development Organisation (DRDO), former Deputy Air Chief said, “The Air Force and the Army have inducted Aakash surface to air missile in large numbers.” Further, “An eco-system has been created wherein many MSMEs participate actively. Brahmos missile system has been indigenised much beyond the level of 50 per cent. Astra Beyond-Visual-Range air-to-air missile is another success story. Large numbers of ground-based radars have been designed and manufactured in India — AEW&C, LCA, ALH and LCH. Most ships of the India Navy are manufactured in India.”

India, which is the fastest economy in the world, is spending around 1.5 per cent of its GDP on defence, which is far less than China, which spends 2.1 per cent and Pakistan, that spends more than 2.36 per cent of its GDP per annum even when it can ill-afford to do so. Actually, around 85 per cent of the defence budget is currently spent on meeting human resource expenses (pay and allowances, including Ministry of Defence civilians pay and maintenance) that leaves a very thin margin for upgradation of defence equipment. India needs to spend 2.5 to three per cent of its GDP on defence if it wants to thwart its adversaries or any adventurism across the borders.

(The writer is a retired Professor in international trade)