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Finding innovative ways of managing defence budget

The nation, apart from allocating funds for national security, must also cater for development, social reforms and upliftment of its population.

Harsha Kakar | New Delhi |


The defence budget has been announced. It is not what the armed forces demanded, nor will it ever be. There is a modest increase of 9 per cent from the previous year. The national pie remains limited, demand for a share continues to rise. The nation, apart from allocating funds for national security, must also cater for development, social reforms and upliftment of its population. The more educated and technologically aware the population, the better will be the recruitment base for the armed forces. Development and national security are linked.

Late President Abdul Kalam had stated in his address to cadets passing out of the Indian Military Academy in December 2006, “National security is born out of two important components. One is economic growth and prosperity; second is the capability to defend the nation against all types of threats.” He added, “You should remember that the national development and national security have to go together.” Hence, the government needs to balance the budget to meet multiple demands. Simultaneously, threats to the nation are on the rise.

On one hand is a belligerent China expanding its footprints in the region, while on the other is Pakistan, which continues supporting terrorist groups operating on Indian soil. India therefore cannot afford to lower its guard nor can it ignore enhancing capacities and capabilities to meet growing threats. While armed forces personnel who lay down their lives for the nation deserve the best equipment available globally, they simultaneously need to re-evaluate their expenditure pattern and evolve measures to cut down revenue expenditure to enhance availability of funds for capital procurements.

Two years ago, the army vice chief, General Sarath Chand, had stated that the budget left no funds even for carry-forward liabilities, yet the army by recalibrating its priorities managed to build its ammunition reserves which had remained deficient for years. This gave them the ability to meet emerging threats and respond to Pakistan aggressively while remaining prepared for escalation.

The budget last year was equally low, yet during the year the armed forces had major inductions including the P81 Poseidon multi-mission maritime aircraft, Chinook and Apache helicopters, K9 Vajra and M777 guns. The army placed orders 77,000 Sig Sauer rifles and will place similar orders in the coming year. The agreement for manufacture, with transfer of technology, of AK 203 rifles from Russia is on the cards. The induction of the S400 missile system and 83 LCA are on schedule.

Evidently, these procurements were beyond budget allocations, implying that in case defence requirements were paramount, the government did create funds. The armed forces also need to understand the government’s constraints and amend their planning and expenditure pattern accordingly. Enhancement of infrastructure in border areas including roads, bridges and airports contribute towards development of the region, not meet requirements of armed forces alone, hence should be largely financed from central funds, instead of the army budget.

During the past three years, adopting this model, the army’s share of investment in this arena has been just 33 per cent of the overall expenditure and should reduce further. The next major internal reform is reducing pay and pension bills which continue growing exponentially. The salary share of the budget has grown from Rs 92,000 crore in 2013-14 to Rs 142,000 crore in 2019-20. Similarly, pensions have doubled from Rs 60,000 crore in 2013-14 to Rs 120,000 crores. This needs deliberation as such an increase in coming years would make sustaining current force levels difficult.

Options to reduce this expenditure include reducing the size of existing forces by implementing joint organizations and establishments as also downsizing. At the same time, extending service tenure of army jawans up to the ages of 45-50 must be contemplated. There are options available depending on arm/ service conditions and these must be pursued. The ancient concept of maintaining a young army should be partially re-evaluated. Few cases of unfit officers and men in the Kargil war should not be considered as the rule.

Alternatively, an option of transferring retiring personnel from the army to central police forces should be evaluated. The Chief of Defence Staff (CDS) should become a fulcrum for managing a shrinking defence budget. He should be responsible for joint procurements based on emerging threats, creating joint structures to reduce manpower while closing institutions which are redundant in a joint environment. Basic equipment and transport should be common to all services and be locally produced. This would reduce logistic holdings and repair facilities.

The creation of joint logistics infrastructure could lead to immense savings in every sphere. To enhance ammunition reserves and overcome shortfalls in capacities the army was compelled to reduce its planned revenue expenditure including construction of Married Accommodation Projects (MAP). For almost three years, MAP projects and other construction had ground to a halt while funds were diverted. There would always be demands on the revenue budget, while aspirations of soldiers would continue to rise.

Alternate means of exchanging surplus defence land in lieu of constructed amenities, not sale, must be considered, freeing this expenditure from a limited budget. The army has successfully implemented a test model, termed as the New Moti Bagh model in Delhi. Here surplus land was exchanged for 5,000 married soldiers and officers’ flats, presently under construction. This can be replicated in multiple cities, where the armed forces hold land in penny packets. The armed forces must push for induction of made in India equipment. This will, apart from saving valuable foreign exchange, enhance job opportunities in the country.

In the initial stage it should insist on indigenous manufacture of ammunition and clothing. It should be accepted that days of elaborate budgets are over as the nation seeks overall development alongside national security. The armed forces need to reorient their expenditure pattern catering for lower availability of funds. Experience has indicated that where essential, funds have flowed. Finally, the defence budget should not be considered as a percentage of GDP but as a percentage of government expenditure. This has always remained around 15-17 per cent and would continue.

(The writer is a retired Major-General of the Indian Army)