India’s Defence Budget FY 18-19 registered only a marginal increase. Allocation from previous FY moved up from 2.74 lakh crores to 2.95 lakh crores. Thus, pitching the increase at 1.58% of the projected GDP for 2018-19. This is probably the lowest in terms of percentage, since the debacle of 1962. This increase is of 7.66% in terms of Budget Estimates (BE) when compared with that of FY 17-18.
India’s Finance Minister Mr Arun Jaitley in his budget speech on Feb 01, 2018, dedicated 183 words to the armed forces of India. He praised the role played by our armed forces in meeting the challenges on our borders as well as in managing the internal security environment both in Jammu and Kashmir and the North East.
The Finance Minister in his speech said, “ever since the NDA Government has assumed office in 2014, lot of emphasis has been given to modernizing and enhancing the operational capability of the Defence Forces. A number of initiatives have been taken to develop and nurture intrinsic defence production capability to make the Nation self-reliant for meeting our defence needs. Ensuring adequate budgetary support will be our priority”.
He emphasised that the government of the day has opened up private investment in defence production, including liberalising foreign direct investment. Mr Arun Jaitley announced his government’s intent to develop two “defence industrial production corridors” in the country. He added that the Government will also bring out an industry-friendly Defence Production Policy 2018 to promote domestic production by public sector, private sector and MSMEs.
The Finance Minister declared that the government was focusing on developing connectivity infrastructure in border areas to secure the country's defences. "Rohtang tunnel has been completed to provide all-weather connectivity to the Ladakh region. The contract for construction of Zozila Pass tunnel of more than 14 kilometers is progressing well. He announced the proposal to take up construction of a tunnel under Sela Pass (in Arunachal Pradesh).
Comparative analysis of the Defence Budget 2018-19 reveals that this increase of 7.6 % is majorly under Revenue head showing an increase of 8808 crores. Increase under Revenue head allotment has eclipsed the increase under Capital head by 1314 crore. A total of 62.52% revenue budget this year goes towards the ever-growing burden of pay and allowances of the armed forces personnel.
This defence budget under Demand No 21, reflects a capital outlay of just Rs 93982.13 crore. This fund is largely utilised for procurement of new weapon systems and modernisation. Out of the amount allotted, nearly 80% would go towards the realisation of existing commitments (installment payments) of deals realised in the previous years. Implying that there would only be 18796.4 cr left for any new procurements towards modernisation.
There is also a capital allotment of 2700 crore for the Coast Guard under the MiscellaneousHead of Demand No 19 of the Defence Budget 2018-19. Thus, making an overall allocation of 96,682.13 crores for capacity and capability building.
However, it must be noted that the defence budget does not include Rs 1,08,853 crore separately allocated for defence pensions.
The annual defence budgets over the years have shown a discernible trend of declining modernisation outlays for new projects. This has meant that our armed forces continue to grapple with critical shortages on several fronts, ranging from tank ammunition to fighters and submarines to helicopters, howitzers and modern infantry weapons.
While the jugglery with the data and the percentages could depict the story of government’s apathy and neglect of our armed forces. The decline in the BE is steady and the trend pans over to almost three decades.
During the FY 2016-17, a sum of 6000 crores was left underutilised. The challenge, so far, actually has not been the budget allocation but rather, its underutilisation. Even doubling this allocation would not solve the issue of underutilisation of BE witnessed each year. The nation suffers in the bargain as capacity building and capability enhancement of our armed forces struggles to meet the growing security challenges. Therefore, the solution lies elsewhere outside the budget.
To overcome the challenge of underutilisation of the budget, estimates and ever-increasing revenue expenditure induced stress, we need to tackle it through structural reforms. It is now for the civil and military leadership of this country to introspect and review the existing structures, strengths, systems and procedures to overcome these existing formidable barriers hindering modernisation.
Col Danvir Singh is the Associate Editor of the Indian Defence Review
(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)