Insufficient Funds?

India has fought seven major full scale wars, since 1947. And going by the frequent border disturbances, it should not take long to prognosticate the threats of another. The Doklam issue is not yet settled, providing contours of threat perception across the border. Agreed, our national policy is always non-confrontational and confirms to a no-first-use pledge. But can we afford to compromise on the preparedness of our armed forces? Can India dither on the imminent modernisation of our defence sector? No, it cannot. Despite all tall claims and while the defence per se is always perceived to be the highest priority and national focus, it is better said than done. The Parliamentary Standing Committee on Defence in its 41st report has scathingly criticised the budgetary allocations for defence services, terming it as “unsupportive and deficient to the needs of the Armed forces”.  

On the other hand, it is important to keep in mind that India is at number 131 in the 2016 Human Development Index and 100 on the Global Hunger Index. With several other socio-economic problems, can India afford to spend more on defence? Let’s take stock of how much is at stake and what could be the policy support.

The Algorithm of Defence Budget
The ambiguity of defence budget is perplexing and due to the lack of an integrated and comprehensive policy, it is best analysed in the simplicity of the percentage of GDP. It doesn’t assimilate the severity of various intangible elements. According to the Ministry of Defence, the defence budget for 2018-19 stands at Rs 4,04,365 crore ($62.8 billion). Of which, Rs 2,79,305 crore ($43.4 billion) is considered India’s defence budget and the balance distributed between MoD (Miscellaneous: Rs 16,206 crore) and pensions (Rs 1,08,853 crore) including Rs 86,488 crore for defence capital.

This is an increase over the last year defence budget layout by 7.81 per cent. But that is the accounting part. The numbers are alarming when measured against the GDP figures; the defence budget has gone down from 2.08 per cent  of the GDP in FY13-14 to 1.49 per cent of the GDP in FY18-19. It is even lower than the pre-1962 era when the budget flipped around 1.6 per cent of the GDP.

Let us compare the figures with China’s official spending on defence. China spent $151.43 billion, or about Rs 10 lakh crore in 2017. It is a no-brainer that actual numbers could be multiples of the official figure. For instance, China’s naval assets include 714 vessels, while India’s naval assets include 295 vessels.


The Conflict Zone
John J. Mearsheimer, in The Tragedy of Great Power Politics (2014), points out that Asia will be an unbalanced multipolar system. And, in this system, China will tend to lead in various conflict zone. Doklam is the grim reminder again. The hegemonic tendency of China is rising to the surface — fast and furiously. Pakistan, which is sinking into a failed state,  seems ever ready to hand over its resources to China. Maldives, too, is understood to have handed the baton to China. Clearly the Indian Ocean will never be the same for India.

To add to the long drawn border disputes with China, Nepal is not making things easier for India as the Chinese roads are stretching their 40-km highway up to Xigaze city linking the Chinese national highway to the Nepal border. Closer at our ‘chicken neck’ located strategically at the tri-junction of Doklam, Bhutan, too,  is not left alone by China. Clearly, the threat perception is more evident now than ever.

On internal security, the current challenges facing India are varied and defer with conventional tactics. These have manifested in the form of constant threats in the shape of naxal extremism, proxy wars along the line of control.

The Open Debate
India is the largest arms importer in the world accounting for 13 per cent of the world’s total imports according to the Stockholm International Peace Research Institute. Our defence budget is also the fifth largest in the world. Despite this, the Indian Army is under dire need of replacing 65 per cent of its equipment. Air Force modernisation is imminent and our squadrons are down to 33.

Here are the facts: an insufficient defence budget impacts not only modernisation but also the current operational preparedness of the force. Reduction in revenue allocation means cutting down on training requirements and routine replacement of items like surveillance and protective equipment.


True, it is equally imperative to have a vision and roadmap that integrate both the components: modernisation and indigenisation. However, several issues plague envisioning this roadmap. For starters, the MoD has a legacy of bureaucratic laggards, which  mostly comprise civil officers. Regular strategic consultations between the political and military leadership are rare. The report by Minister of State for Defence Subhash Bhamre, stating that only 8-10 per cent of about 144 proposed deals in the last three years fructified within the stipulated time, speaks volumes. V.K. Saxena, Former Director General Corps of Army Air Defence, Indian Army admits to the insufficient allocations in the budget but also talks about under utilisation of funds. “Take the case of 2016-17, there was an underutilisation of Rs 7,393 crore (10.5 per cent of allocation). The same is true year-on-year,” says Saxena.

There is a crying need to move towards greater integration among the three services and the MoD. Though recently, there is renewed focus on this part in MoD, more needs to be done. The Defence Acquisition Council (DAC) chaired by Defence Minister Nirmala Sitharaman approved proposals worth more than Rs 15,000 crore  under “essential components”  but that is short of ToT (transfer of technology) and towards indigenisation. The urgency will always create a crisis-like situation for the military and activate the import cycle and thus the requirement of comprehensive defence policy and increase in the budgetary allocations.

Make It and Do It in India for Defence
There is no denying the dichotomy of budget allocation. Sujeet Samaddar, Senior Consultant at Niti Aayog who has the dual distinction of mastering the technical know-how on the subject and having a broader outlook on policy making says: “The foremost requirement to deliver on the ‘Make in India’ policy is demand aggregation and smart procurement, which would create the scale and size to create manufacturing in India.” He points out that the piecemeal orders that are prevalent now will not create national capacity. “For example, the navy and the air force fighter programmes must be forcefully combined and built around a common engine manufacturer, all 24 mine sweepers and 18 submarines should be ordered in one go, the almost 14 lakh small arms should be ordered together.” He emphasises on the integration and finding common ground for tactical efficiency and cost reduction.

Budget must provide the capital to address the critical components of modernisation besides critical supply to the readiness of the Indian military. MoD must take the drastic steps of building an ecosystem of defence manufacturer including OEMs (original equipment manufacturer) and liberal policy for ToTs by launching new defence production policy in 2018. “The further liberalisation of FDI under automatic route should be actively considered. And, the defence procurement procedure must be simplified and aligned with standard and simple procurement procedures,” says Samaddar.

While the Indian Army is guarding the frontiers, it is imperative that we do not let them down, least of all due to bureacratic reasons.