Defense is not a particularly endearing subject for India's parliamentarians. The Loksabha did not pay any attention to serious flaws in the defense budget. In the budget speech 2012-13 Finance Minster Pranab Mukharjee devoted less than 35 seconds to National Security & defense budget out of a total of two hours. He spent even less time on Internal Security. There was no mention of Maoists (naxals) who control more than 35% of the country. The Prime minister after acknowledging the contribution made by the defense forces gave the usual assurance by intoning that “where defense of the country is concerned, money would not be a consideration."
Despite serious escalation in the overall threat to internal security the Home Ministry spent less than the allotted budget meant to procure modern weapons. No mention was made for strengthening the Border Management to provide for construction of fences, roads, flood-lights on the international borders etc. The Indian defense budget must possibly be the most opaque document in the world.
The Defense Budget was hiked by more than 17 per cent to Rs.1,93,407 crores from last year's Rs.1,64,415 crores. Of the total outlay, over Rs.79,500 crore (CAPITAL BUDGET) would be spent on procuring modern weapons systems and military hardware. This allocation is based on the present needs. Thus the Revenue Expenditure would be Rs.113,907 crores. The deals which are likely to be signed this year include 126 Medium Multi Role Combat Aircraft (MMRCA), 145 Ultra Light Howitzers (ULH), 197 Light Utility Helicopters and others weapons and systems for the three services.
Impact on Modernization
The Indian Armed Forces are on a modernisation drive. The shopping list of the Services includes virtually all types of weapons, including guns, fighter aircrafts, armoured vehicles, air craft carriers, naval vessels etc. The most pertinent question is whether the latest budget makes necessary provisions to meet these requirements. Given the fact that the modernization programme of the armed forces largely depends on capital acquisitions, it boils down to how capital budget is allocated. Assuming that nearly 80 per cent of the capital budget is meant for capital acquisitions, the latter consisting of 60 per cent of committed liabilities (payment of contracts already concluded /awarded) and 40 per cent of new schemes, the main sub-divisions of the capital budget are as below:
Total Capital Budget : Rs. 79,500 crores.ie 41.10 % of total budget
Capital Acquisition : Rs. 47,700 crores
Committed Liabilities : Rs.31,800 crores
New Schemes: Rs.15,900 crores
First-Rate Army with second-rate equipment
India's long-term rivals, Pakistan and China, allocate around 3.5% and 4.3% of GDP to defense respectively, while India has been allotting less than 2.5%. US military aid of more than $10 billion is being misused by Pakistan to modernize its army.
India's defense budget is less than half of China's officially claimed figure, the military gap between India and China is growing every year. India needs to invest more in improving the logistics infrastructure along the border with Tibet.
The UPA government who provided Rs.60,000 crores for writing off farm debts & thousands of crores for various subsidies, pegged the defense budget below 2.5 percent of the GDP for most of its tenure. Despite small increases in annual defense budgets since 2001, expenditure has decreased in real terms and as a percentage of GDP plus if you take inflation rates into account. There is a glaring shortfall of more than 25% between what is required by the services and what they are allocated. Expenditure for modernization is the main casualty of bottlenecks and paralyzing bureaucratic procedures. Defense Minister A.K. Antony has admitted that while new procurement of arms has commenced, still we are lagging by 15 years.
Indian Army has been described as a first-rate army with second-rate equipment. Because of mismanagement by successive governments most of the equipment held is very old. India’s armoured regiments require one thousand main battle tanks [MBT] T-90S. T-72 Ajeya has to be upgraded to increase its life & capabilities. Artillery was last upgraded in mid 1980s. The Corps of Army Air Defense has obsolete equipment that needs replacement. India also needs to raise and suitably equip mountain strike divisions to carry the fight into Chinese territory. Modernisation plan for India’s cutting edge Infantry battalions is moving at snail’s pace.
The IAF’s biggest programme is the multi-role Combat Aircraft requirement for 126 fighters. Building of naval ships takes very long time & hence the requirement has to be forecast in a scientific manner. After protracted negotiations, New Delhi agreed in 2004 to buy the 45,000-ton Admiral Gorshkov / INS Vikramaditya. However, amidst stern diplomatic rows a delivery delay until 2014 is expected.
Allocation & underutilasation of resources in the budget
How much of allocations for new defense acquisitions has been returned unexpended this year, those figures are not available in open domain at present. As the defense preparedness of the country largely depends on the firepower it possess, which in turn depends on capital expenditure, the latter’s timely and efficient utilisation deserves due consideration. The underutilization of resources allocated under the capital head in the defense budget has been growing at a rather alarming rate. In absolute numbers, the underutilization has increased by over four-and-a-half times between 2004-05 and 2008-09. In percentage terms, it has increased from 4% to 15% in the same period. The MoD, in recent years has miserably failed to improve acquisition procedure, the recurring underutilization of resources highlights the weakness in the system.
Let the defense minister also explain his ministry’s pathetic record on defense spending under his watch. What, to his mind, is the optimum capital to revenue expenditure ratio for national defense? How can it be achieved, if capital spending is either being re-appropriated into revenue expenditure or being returned unutilized? Should the defense spending be related to the national GDP or should there be a quadrennial defense review conducted by the government to determine the budget for the defense Long Term Procurement Plan?
FMS is more expensive than direct negotiation ?
His reputation for integrity is responsible for his bad administration. When A.K. Antony was appointed as the country’s defense minister, Prime Minister Manmohan Singh commented to a colleague in a flash of dry humour : “The finance minister should be happy. Now the defense ministry won’t spend a single rupee and the finance ministry will save lots of money.”
Known as ‘Mr. Clean’, this much is true : Defense purchases are down to a trickle and what little is being bought is through the government-to-government, foreign military sales (FMS) route rather than directly from private sector arms manufacturers. That way, Antony manages to avoid controversy, although, typically, FMS is more expensive than direct negotiation and helps the private sector defense industry in the other countries (mostly the US) rather than the Indian industry. How much of military equipment since last 10 years has been bought by FMS route ? We need to know the accurate figures.
With his credibility and reputation for probity, modernisation plans for the three services could have moved much faster. But because of his reputation for integrity, Antony has chosen to be a bad administrator rather than being a good one. What has India done to deserve such a loser as a defense minister? Antony has been as enterprising as a tortoise.
Antony’s obsessive quest for unblemished weapons procurement has delayed the acquisition of artillery and anti-aircraft guns, fighters, submarines, night fighting gear and a host of equipment upgrades. With arms inflation at 15 per cent per annum, a five-year delay means that India pays twice what it should have. And when that equipment is obtained through government-to-government purchases and other single-vendor contracts, the cost is about 25 per cent more than it would have been in competitive bidding. Conservatively estimating that delays afflict just half of the defense ministry’s Rs.50,000 crores procurement budget, India buys Rs.25,000 crores worth of weaponry for 125 per cent more than what it should have paid. Of course these are generic figures. Somebody with access to actual data we can give more accurate figures. I sincerely hope that my deductions are wrong. To inconvenient questions about procurement delays, Antony declares that “India is a democracy” and “we have to ensure full transparency”.
This does not bode well for a nation that claims to be pursuing a much hyped defense modernization programme. This is much more important for a country like India that faces a unique security environment with two of its 'adversaries' straddling it on two sides of its borders and problems on all sides of its periphery. No one takes India's claims of being a rising military power seriously anymore and Indian adversaries are getting bolder by the day.
Is it any wonder then that India presents itself as a sitting duck to its adversaries? There is no substitute for institutional effectiveness in security policy-making. Otherwise, budgets will come and go without adequately serving Indian national security interests. We should be at least one step ahead of our enemies, but unfortunately we are 10 years behind.
In its last two years the UPA government must lay solid foundations so that in the decades to come a rising India is not scouring the world for military hardware. This trend needs to be reversed.
Antony has been following a principle since time immemorial, which is not to do anything about anything and let things be!! Example P V Narsimha Rao, Manmohan Singh, who despite being an economist has not been able to do anything about inflation. Therefore it’s no surprise that Shri Antony is sitting tight and not doing anything.
His so called clean image has done unspeakable damage to our armed forces and their capabilities. Had it not been for the media ringing alarm bells of our falling capabilities, the present government would have rather slept over it. The nation need not worry, the armed forces will fight with whatever it has & fight very well, as it happened in Kargil. But they need an efficient & effective Ministry Of Defense who can give them weapons as modern as the enemy.
About Brig. Hemant Mahajan
Brigadier Hemant Mahajan (YSM) joined armed forces since 1973. Started his military life as an officer with the ‘7 Maratha Light Infantry’. Brig. Mahajan has served in the most sensitive areas like Jammu & Kashmir, Punjab, North Eastern states. Importantly Brig. Mahajan had an experience of serving his duty in highest and tough warzone like Kargil, handling peace situation in furious Punjab after the ‘Operational Blue Star’ and the Ayodhya region. Along with ‘Youth Seva Medal’, Brig. Mahajan is recipient of various Military awards for his excellent track record.