The defence expert opines that a decent defence allocation is as crucial as proper utilisation of funds allocated, among other factors

As the nation awaits for the Union Budget 2018, to be tabled in the Parliament on February 1, the question that looms large for security experts is - will the government loosen purse strings to aide men and machines guarding our borders. 

Before the question can be answered by Finance Minister Arun Jaitley on Thursday, let's understand if it needs to, ie, increase the defence allocation in the budget.

In budget 2017-18, defence budget was Rs 2.74 lakh crore - a hike of six per cent from previous year's Rs 2.58 lakh crore. However, in terms of GDP the defence share has consistently fallen from 2.15 per cent of the GDP in 2015-16 to a mere 1.62 per cent last year. 

According to Minister of State for Defence Subhash Bhamre, even as the share of defence budget has fallen, the total amount has increased from Rs 2,46,727 crore in 2015-16 to Rs 2,59,261 crore in 2017-18.

Despite that, a key defence ministry panel recently recommended that the spending should be at par with the global standard of 2-2.5 per cent of the GDP. China spends 2.1 per cent and Pakistan 2.36 per cent.

A senior defence expert opines that the percentage of the GDP does not matter as long as there is enough fund for both acquisition programs and maintenance of current troops and machines, and is utilised properly. "It does not matter whether the defence budget amounts to 2.5 or 1.5 per cent of the GDP. Even one per cent of the GDP would translate into a huge figure in absolute terms if our GDP is of the magnitude of, say, Japan," said Amit Cowshish, former Financial Advisor (Acquisition), Ministry of Defence. 

"Paucity of funds does impact the acquisition programs, which have a bearing on modernisation of the armed forces but this is not the only reason as would be evident from the fact that practically every year a part of the capital outlay remains underutilized," Cowshish told India TV Digital. 

Even as India cannot compare to China's GDP or defence budget, our ministry has failed to utilise the entire funds year after year. In fact, the aforementioned defence panel, headed by BJP stalwart Maj Gen BC Khanduri (Retd), recommended the establishment of a fund through which unspent annual expenditure would be rolled over into a following year’s defence budget, but the idea was rejected by the Ministry of Finance.

The report, which was submitted to parliament on December 19 last year, said the MoD’s suggestion to create what it termed as a “non-lapsable capital fund” had not been accepted by the MoF on several grounds including its contention that India’s defence budget is sufficiently large to source necessary modernisation funds.

Man Vs Machine: Maintenance Or Modernisation

The reports prepared by the parliamentary standing committee on defence, headed by Khanduri, clearly show a steady decline in the capital expenditure budget of the defence ministry – it was 32 per cent in 2016-17 from 41 per cent in 2007. One big reason for this has been the recent revision of salaries for armed forces personnel.

This effectively means that over the years, the military has been using more and more of its resources to sustain the assets it has – from ammunition to fuel, salaries and maintenance of infrastructure – than to modernise its equipment.

Between expenses in maintaining human and technical assets and in procurement, the defence expert opines, "It is far more important to ensure that the existing resources – be it manpower or equipment - are in a state of operational readiness."

Make In India Or Foreign Defence Acquisitions Or Both

Within the constrained defence acquisition budget India seems to be battling between the choice of defence acquisition from foreign markets or make in India when the answer should be both. 

Make in India or buying from foreign markets are not mutually exclusive alternatives. "It is not possible to make everything in India, especially within the required timeframes. Therefore, the ministry has to keep its options open," explained Cowshish, who has been on the panel of several key acquisitions for Ministry of Defence. 

"Where the requirement brooks no delay, the ministry will have to go in for outright purchase or at best adopt the ‘buy and make’ route, which entails manufacturing of the equipment in India. Indigenisation can also go on simultaneously in these cases. However, for requirements that can wait or that are futuristic, Indian industry can be called upon to undertake indigenous research, design and development of the prototypes. That is what the ‘Make’ procedure, introduced in 2006, was all about."

What Indian Army, Air Force and Navy Need From Defence Budget 2018: 

Indian Army chief Gen Bipin Rawat recently said that the focus is now on futuristic weapon systems. Addressing the troops on Army Day earlier this month, General Rawat revealed that the land forces are bolstering its aviation wing with new helicopters. He said the missile system in the Army's air defence is also being strengthened. 

He also said that the cadre review of JCOs (Junior Commissioned Officers) and other ranks have been approved which has resulted in the creation of 479 additional posts of Subedar major, 7,769 posts of Subedar, 13,466 naib subedars, 58,493 havaldars and 64,930 naiks. 

And "any accretion in manpower will certainly entail additional revenue expenditure on pay and allowances, ration, clothing, training, etc, as well as capital expenditure for equipping the new raisings," added Cowshish. 

Air Force is a capital-intensive Service and requires regular technological advancements in the infrastructure and combat systems, the parliamentary committee on defence had said. 

Against the desired strength of 45 fighters squadrons, the IAF currently has 33 squadrons which “will further go down to 19 by 2027, and may further reduce to 16 by 2032”, the committee noted.

The committee said it was “concerned about the adverse and cascading effect that deficiency of funds could lead to especially on modernisation and operational preparedness of Air Force”.

In terms of maritime security, China's increased activities in Indian Ocean and Arabian sea has made it imperative for India to scale up investments in maritime security and safety. Sea prowess is also being deemed as a key foreign policy tool. But India may not be ready for the challenge due to 'serious financial constraints', the defence expert opined. 

Final Word: 

Even as the defence expert expects 'nothing beyond the usual increase of roughly 10 per cent over the current year’s estimates', the Parliamentary standing committee on defence has asked the defence ministry to “take concrete measures to exercise prudent and effective budgetary planning” to properly utilise funds.