Will Nirmala signal a change in defence allocations (English Version) 27 Jun 19
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Will Nirmala signal a change in defence allocations? (English Version) 27 Jun 19
This is not the first time that a minister has handled both defence and finance in the same government. Pranab Mukherjee handled defence and finance at different times under Manmohan Singh, so did Jaswant Singh in the Vajpayee government. Under Modi, Arun Jaitley handled defence and finance simultaneously on two occasions, pre and post Manohar Parrikar. Presently, Nirmala Sitharaman has moved from defence in her last appointment to that of finance. She will present the national budget on 05 Jul 19.
Further, with the formation of the Defence Planning Committee (DPC), under the National Security Advisor, Modi would be clearly aware of shortcomings in the capabilities of the armed forces and the basic budgetary support it would entail. These inputs would also be available to the finance ministry as their secretary (expenditure) is also a member of the DPC. Doval, who heads the DPC, and Modi are equally aware of the increasing threats India faces and the need to enhance capabilities to counter them.
Nirmala, as a former defence minister, is aware of pitfalls in capabilities and its impact on the ever-increasing threats on the horizon. She has witnessed first-hand the strike on Balakote and knows the disadvantages the air force faces with its aging fleet. She has interacted with service chiefs and supported their battle for funds from an unrelenting ministry of finance, under Jaitley. In fact, for the armed forces, none could have been a better choice as a finance minister than one who is aware of its capability shortcomings.
There is no doubt that she would have to juggle funds as the kitty is limited. Money is also needed for development, social programs and other reforms which the government considers equally important. After all the nation needs to develop rapidly and its population’s social concerns addressed. Simultaneously, is the fact that without national security, internal development is hampered. Within this quagmire she needs to find solutions. Solutions could come with cost cutting in wasteful expenditure of the MoD.
She would need to interact with Rajnath Singh, the present defence minister to arrive at some solutions. Within the MoD itself there are means of generating desired funds. The first is to consider offloading defence PSUs which have been generating losses or whose products can be obtained from the open market. This, apart from adding revenue would enhance employment in the private sector. This may be a tough call but only a government which has such a powerful mandate can implement. Ignoring this action at the commencement of its tenure would mean an opportunity lost.
Linked to this is to curtail funds for ordnance factories. Rather than wasting money in modernizing them, investments should be enhanced in the private sector under different options of partnership with the armed forces. With the growth of the private sector in defence manufacturing, dependence on imports would reduce. This would be beneficial in the years ahead. Imports of military equipment always come with riders. The supplier can also turn the tap off by curtailing supplies of spares at crucial junctures.
The second option is to compel the government to appoint a Permanent Chairman of Chief’s of Staff Committee (PCCOSC). The earlier this appointment is nominated the faster does joint planning and procurement take shape. This would lead to realistic and joint procurement plans. With this appointment should also be the merging of the MoD and the IDS. This would reduce staffing in Delhi and along side reduce maintenance costs of the MoD. In addition is to curtail the internal funds of the MoD, which are wasted on unwarranted costs like fighting court cases against logical AFT decisions.
The MoD should also insist that the three services implement their own cost cutting measures aimed at cutting revenue expenditure by 7 to 10%. Its detailed plans for the same should be in place at the earliest. All organizations of the MoD must contribute in equal measure to ensure maximum utilization of available funds.
While the demand from defence strategists have always been 3% of the GDP, such an allocation may appear to be impossible to obtain. Hence, a more realistic allocation of around 2% would be a remarkable change. Nirmala would need to keep in mind committed liabilities based on earlier procurements, before determining the capital share of the budget.
I have two humble suggestions for her, based on actions of her predecessors. Arun Jaitley had admitted in a TV interaction, post the nation moving into election mode, that allocations for defence were below desired levels and should have been more. This was an afterthought by him after having presented all budgets of the previous government. Seeking to withdraw a fired bullet is neither possible nor appreciated. His statement only enhanced anger at the national level as it indicated his biases against the armed forces.
Piyush Goyal in his maiden budget speech, as the officiating finance minister when Arun Jaitley was away on treatment, gave the figures of the defence budget as crossing Rs 300,000 crores for the first time and not the percentage share of the GDP. In fact, in his budget the percentage allocation (1.4%) was the lowest since 1962. He had hoped to create a positive image by giving numbers, but frankly at the end of the day no one was amused by his action.
There is hope within the defence community that Nirmala would adopt a thoughtful approach in preparing her budget and not carry an anti-armed forces bias, as her predecessor had done. She, as the finance minister may not be responsible for national security but would be sympathetic towards those who are responsible but hampered due to lack of funds.
About the Author
Maj Gen Harsha Kakkar
Retired Major General Indian Army