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BW Businessworld

Defence: A Heavy Load

Surely, a country with a 15,106-km-long border with testy neighbours needs to spend more than a mere 1.58% of its GDP on defence?

Photo Credit : Shutterstock


Imagine another Doklam-like crisis at the border. Could such an event perhaps even jeopardise the narrative on nuclear deterrence? India shares a border, often porous, with seven nations, of whom some are hostile. The two overtly hostile neighbours, China and Pakistan, together share a border with India that is 6,811 km long, of which 3,488 km lie along China and 3,323 km along Pakistan.  

Statistics with the Indian Army show 1,684 casualties in combatting terrorists infiltrating the Indian borders between 2005 and 2017. These brave soldiers laid down their lives fighting during the frequent ceasefire violations, in counter-insurgency operations and in thwarting terrorist plots that targeted parts of India beyond the borders. General Ved Prakash Malik, who was India’s 19th Chief of Army Staff, rues that territorial defence would be India’s primary concern in the light of the prevailing challenges. “India has to be a strategic stabiliser,” says General Malik. “We are in the middle. We have so many nations around. I believe our stability is most important for the subcontinent,” he  says emphatically.

The International Institute for Strategic Studies (IISS) says in a report that the “overall capability of the (Indian) Army is limited by inadequate logistics, and shortages of ammunition and spare parts”. In a few months a new government will take on the mantle. Will it respond to the challenges the Indian Armed Forces face in their call of duty? Will it modernise the defence forces and add to their firepower? BW Businessworld attempts to read the cards on the table.

In the 2018-19 Union Budget, which was to be the last full Budget before the general elections, Union Finance Minister, Arun Jaitley, had allocated Rs 4,04,365 crore ($62.8 billion) for the Ministry of Defence (MoD). Of the total allocations, Rs 2,79,305 crore ($43.4 billion) was earmarked for India’s defence budget and the rest was distributed between the MoD (miscellaneous, Rs 16,206 crore) and defence pensions (Rs 1,08,853 crore). The  defence outlay for 2018-19 worked out to just about 1.58 per cent of the gross domestic product (GDP)  the lowest since the 1962 war with China, when it was a mere 1.65 per cent of  the GDP.  

“The defence budget 2019-20 is unlikely to see a major hike, considering that it is the last Budget before the general elections,” muses Laxman Kumar Behera, a research scholar at the Institute of Defence Studies and Analyses (IDSA). “The capital expenditure, which is key to modernisation, is also likely to remain subdued because of  the hefty growth in manpower cost,” he says. The IISS report too blames the manpower burden of the defence forces for their meagre  spending on modernisation. The report says, “Development and procurement programme across the services are aimed at replacing ageing equipment, but many projects have experienced significant delays and cost overruns, particularly indigenous systems. The inevitability of the crisis with (the) defence budget begins right away as the manpower costs account for over 83 per cent of the overall defence budget and so then what is left for modernisation under the capital expenditure?”

The trend so far
Budgetary allocations for defence have dwindled in real terms since 1988, when the allocation was 3.18 per cent of the GDP. When the global standard among nations with sizeable military strength (around half a million) is about two per cent to three per cent of their GDP, India’s allocation of 1.58 per cent of  the GDP for defence, seems paltry. General Malik concedes that the Indian government’s expenditure on defence has been declining in real terms.

The nominal increases in the defence budget over the years had not covered the escalated costs of military hardware purchases, particularly from overseas. Behera points out that the capital outlay for critical modernisation had in fact declined by 12 per cent in the case of the Navy and 6.6 per cent in the case of the Indian Army.

All militaries around the world thrive by improving their combat capabilities, of which capacity building is a continuous exercise. Says Major General S. B. Asthana, a defence analyst, “A military should have 30 per cent state-of- the-art and newly inducted weapons and equipment, 40 per cent current profile and 30 per cent obsolete/about-to-be obsolete weapons and equipment. In India this ratio has been very poor  for many decades.” At the moment the Armed Forces are overwhelmingly dependent on imports for not only big ticket military equipment and hardware, but volumes of basic component too. So, there is a need to move toward self-reliance at a much faster pace now than before.

“Conditions, therefore, have to be created that make economic sense for the private sector and there should be no protectionism for the public sector – so everyone has a level playing field,” suggests Major General Asthana. He calls for a “right mix of Make in India as well as purchase of state-of-the-art equipment with transfer of  technology” till India attains a reasonable level of self-reliance. Incidentally, enhancement in the capital outlay for defence in the coming year will also find claims from R & D and the medium and small and medium (MSME) and ancillary industries in the sector.

The defence civilians
Manpower cost is at the moment a major challenge for the defence forces, impacting the revenue part of the defence budget. “The actual flab which needs to be cut to get the right ‘Teeth to Tail Ratio’ are defence civilians, who consume a disproportionately large amount of the revenue budget, because they serve till they turn 60 years of age and get Non Functional Upgrade (NFU),” says Major General Asthana. “The biggest misperception is in identifying the tail. The manpower in the Army, including officers, need to be redeployed and not reduced, to be able to take on combat roles more effectively,” he says.

He rues that “civil servants and politicians” had not allowed the defence civilians cadre to be pruned over the last few decades. They had on the contrary, given them “upgrades and expansions, even when not asked by the Army,” he says,  pointing out that recent studies had not looked at the strength of defence civilians in the Armed Forces. He felt that media reports of a cadre review by a 11-member panel that had hinted at  a cutback in the strength of the Indian Army by 1,50,00 troops was “impractical”.

The road ahead
The Indian Army has re-prioritised its five-year plan for 2018-2023 to meet its operational requirements. Its new priorities include state-of-the-art equipment, 5.5 lakh guns and snipers to replace a decade-old INSAS and building roads for better connectivity along the frontier with China. The Indian Air Force will be down to 29 squadrons by March 2019  a dangerous level. It will also need to acquire more fighter jets in the future. A search is already on for 110 Future Multi-Role Fighters (FMRF) to replace the vintage MiGs.

The Navy is a step ahead of the other two forces in the modernisation process. It is embarking on an advanced level of capability. Project 75(I) envisages construction of six submarines worth about Rs 60,000 crore, while Project 75 involves acquiring six Scorpene submarines, two aircraft carriers, namely INS Vikrant and INS Vishal and the ShinMaywa amphibious US2 from Japan.

Incidentally, India’s defence budget is now the fourth largest in the world after that of the United States, China and the United Kingdom, yet it is wanting in firepower. It urgently requires an increase in capital outlay. “The defence budget should be increased by up to 2 per cent to 2.5 per cent of the GDP or raised by about 20 per cent every year over the next five years,” suggests General Malik. It goes without saying that the import cycle cannot be curbed till manufacturing of military hardware within India reaches an advanced level. The new government that will be at the helm of India, obviously has its task cut out for it. It will have to refurbish the defence budget.

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magazine 22 december 2019 defence Union budget 2019