Beyond the defence budget The Excelsior 24 Jul 19
Beyond the defence budget 24 Jul 19
The total allocation to the MoD in the defence budget this year remained at the same level as in the interim budget at Rs 4.31 Lakh Crores, which includes 1.12 Lakh Crores for defence pensions. This works out to 2.04 percent of the GDP and approximately 15.5% of the total central government expenditure. This is clearly a downward trend from previous years. After removing pensions, it is approximately 1.60%. The demand has been for 3% of the GDP.
Of the 4.31 Lakh crore, approximately 75% would be allocated to the armed forces, while the rest would be spread over defence pensions, Coast Guard, Border Roads, Ordnance Factories, DRDO, Armed Forces Tribunal etc. Of this figure approximately 60% would be for salaries, the balance spread over other heads including procurements from revenue. Approximately 6% would be earmarked for revenue works.
On the capital side, there is an increase in 10% from the previous year. This, apart from catering for inflation and committed liabilities, which account for almost 85% of the capital budget would theoretically leave little for enhancing capabilities. Logically therefore, balance amounts are only enough for signing a few procurement contracts. There is also a growing gap between the projections of the forces and the availability of funds.
There have been other problems too. Without reorganizing apex management of defence, the armed forces five-year plans end up as an amalgamation of the demands of the three services, without considering inter-service priorities and expected financial allocations. This is because there is no single point authority to implement strong decisions. The HQ Integrated Defence Staff (IDS) which remains the agency to project demands has no head, and it functions under the Chiefs of Staff Committee, where contentious topics are avoided. The five-year plan approved by the Unified Commanders Conference in 2017 projected a requirement of close to 30 Lakh Crores, an amount which involves five defence allocations. Such figures remain a dream. Hence, appointment of a Chief of Defence Staff or Permanent Chairman Chiefs of Staff Committee is essential.
The government remains confused between its requirements of enhancing national security and taking the national economy to the magical USD 5 Trillion mark by the end of its tenure. It officially feels that enhancing security needs would imply lesser funds for meeting the demands of pushing economic growth. It can only meet additional defence expenditure by cutting down its own, expecting which is unrealistic.
Simultaneously, there is a news report of last week which stated that based on the recommendations of the finance commission, the Union Cabinet approached the Finance Ministry to consider if, ‘adequate, secure and non-lapsable funds are made available for defence and national security.’ If this is accepted it would alter the funding mechanism for defence requirements. Non-lapsable funds have been the demand of the armed forces for a long time.
This would lead to an assured allocation of funds. The cabinet has also asked the finance commission to examine ‘whether a separate mechanism for funding ought to be set up, and, if so, how should it be operationalized.’
Shortfall in funds has been the bane since the present government took office in 2014. Prior to that the problem was different. Funds were released, however Anthony, fearful of the Bofors scandal being repeated and his image being tarnished by his political masters, refused to sign any contract. For him, his own reputation was more important than enhancing national security needs. Thus, defence capability and ammunition holding shortfalls only increased over the years.
The flip side to the story is that despite such shortfalls, even highlighted by the then Vice Chief of the army, General Sarath Chand, to the Standing committee of defence, defence deals have continued being signed. General Sarath Chand had stated that the army does not even have funds to meet its committed liabilities. In a written reply in the Lok Sabha the Minister of State for Defence, Rao Inderjit Singh, stated in Jul last year, that 169 procurement proposals have been approved during the last three financial years and the current financial year with total Acceptance of Necessity (AoN) cost of Rs 2,49,755 crore.
Even presently, there are multiple deals in the pipeline. The air force is seeking additional aircraft to replace its aging fleet and SPICE ammunition from Israel, apart from pushing for enhanced production of Tejas amongst other deals. It is also considering procuring 18 additional SU 30s from Russia. The S 400 deal to boost air defence capabilities has been inked.
The navy is placing orders for additional helicopters, ships, surveillance aircraft and strengthening its missile capabilities on its existing ships. It has also kickstarted the process to procure 6 submarines under Project-75 costing over Rs 50,000 crore. The army has paced orders for 155mm artillery guns, production of AK 203 rifles and other equipment. The three services would soon be provided with their own collection of Predator Drones. The new service commands which have been raised are also being provided funds for enhancing their capabilities.
If the government and the armed forces were only to stick to the defence allocations in the announced budgets, much of the planned equipment may not have been procured. It would have been a combined effort amongst the services to in some manner cut down their revenue expenditure to procure some from the revenue head and the balance would have been supported in some form by the finance ministry. On a request from the service chiefs, the finance minister assured availability of funds beyond allocations in the budget, for fresh procurements.
Whether government support for procurement would be by cutting other allocations or at the Revised Estimates stage, remains a mute question. The army did in the last three years slow down some internal projects to generate funds for procurement of ammunition from the revenue head. The same procedure would have been adopted by the other services to enhance revenue procurements, while capital demands were being met. Thus, while the figures presented in the budget may appear to be low, there is likely to be availability of funds to ensure capital procurements.
About the Author
Maj Gen Harsha Kakkar
Retired Major General Indian Army