India is grappling with an aggressive Dragon in the north, with uneasy stalemate on LAC beginning to acquire LoC type character. Hence, expectations from defence budget are indeed very high. These are further fuelled by the stark reality that challenges have multiplied, with no resolution in sight on the western border. They are further exacerbated by China and Pakistan acting in collusive mode. Even internally, quest for conflict resolution in proxy war in J&K, simmering insurgency in NE and LWE affected areas has met with only incremental success. It is also fairly apparent that diplomacy and alliances, like Quad, have limitations. The only recourse in dealing with China is to follow West African proverb, quoted by former US President Theodore Roosevelt, “speak softly and carry a big stick”.
The stick translates to two primary manifestations — defence modernisation and infrastructure in border areas. The current government, with its muscular approach was naturally expected to accelerate the process. There is discernible progress on connectivities, accompanied by fanfare, which has served to ruffle sensitivities across. It is axiomatic that infrastructure is matched with capabilities and modernisation, which entail long term planning and higher budgetary allocations. Much needed rebalancing of force has been ordered and other optimisation measures are under consideration. However, optimisation and modernisation are not zero-sum functions. The government in its first term opted for ‘bread-and-butter’ development issues with defence budget pegged below 1.5% of GDP. Defence modernisation barely found mention in budgetary speeches.
Defence planning has remained largely an annual exercise, anchored to budget, peppered with knee jerk emergency procurements. The only achievement seems to be production of another 657 pages long manual, titled as Defence Acquisition Procedure (DAP)-2020 with distinct ‘Atamnirbhar’ slant. There have been many versions of Defence Procurement Procedure (DPP) since 2002, but unfortunately, in post Bofors and Rafael era, process and procedures have become an end in themselves. Long Term Integrated Perspective Plan (LTIPP) and Defence plans, spread over 15 and 5 years, respectively. These are essentially theoretical articulation of wish list, with no assurance on funding. The current Defence plan, promulgated in 2017 has an outlay of Rs 26.84 lakh crore. This would imply doubling of budgetary allocations with roll over budgeting and entailing non-lapsing capital fund. Both remain logical prerequisites, yet to find approval from financial czars.
The obvious question is why such outlandish planning, especially when average decadal growth in defence outlay has been limited between 8 to 10%? The answer to this lies in successive governments asserting that there is no resource crunch for forces, primarily to pander to domestic constituency. This is further amplified by skilfully projecting each acceptance of necessity (AON) as acquisition. With dysfunctional procurement system, it only adds to burgeoning pile of such proposals, which even with assured funding can take 5-8 years to enter operational service. One such emphatic assertion was made in parliamentary standing committee on defence (SCoD), in response to my briefing on hollowness in the aftermath of leaked DO letter of COAS in 2011. It was again reiterated in July 18 by Raksha Mantri, “there is neither a shortage of funds nor ammunition”. This was after the Vice Chief had told SCoD that budgetary allocations for the Army at Rs 21,388 crore are insufficient even to cater to committed liabilities in 125 schemes of Rs 29,033 crore. He even flagged that equipment profile was 68% vintage, 24% current and only 8% state of art or modern. To inject objectivity in this debate, this dismal state has been reached due to inadequate funding by successive regimes. As per informed opinion, India has the lowest per capita expenditure on defence, amongst the top six club. It will be appropriate to compare gap between projections by Armed Forces, against actual budgetary allocations in last decade. Shortfall was Rs 23,104 crore in 2011-12, peaking in 2018-19 to Rs 1,12,137 crore, plateauing at Rs 1,03,535 crore in 2020-21. Large percentage of this gap, approximately 75% impacts modernisation, averaging Rs 75,000 to 80,000 crore. This resulted in another scathing report by SCoD in 2020. It also meant that in January 19, payment of Rs 20,000 crore to HAL had to be withheld to meet external contractual liabilities.
Last defence budget (2020-21) reflected 1.82% increase over previous one with an outlay of Rs 3.37 lakh crore. In this, capital budget, catalyst for modernisation included meagre increase of 3%, amounting to Rs 3,400 crore, over the revised estimates (RE) of 2019-20. The Air Force engaged in major modernisation drive and was allocated Rs 43,281.91 crore, which was lower than RE of Rs 44,869.14 crore. Chinese aggression on LAC has resulted in emergency purchases of $2 billion since June 20, 2020 and exemption of Covid curbs on DMA, except DA pay outs.
The biggest challenge in Covid-induced economic downturn is to find resources for modernisation. There has been buzz that in 2019, the government had finalised substantial defence modernisation plan with an outlay of $130 billion over seven years. Despite expectations, it is unlikely to be included in budgetary outlay and may be announced, as an intent to be funded later. At best, an increase of Rs 10,000 to 15,000 crore towards capital acquisitions is anticipated. While there is push for ‘atamnirbharata’ but it is appropriate to put on record the fact that CAG and other bodies have flagged disproportionately high costs of indigenous platforms. It may be worthwhile to look at targeted and smart self-reliance, coupled with strategic collaborative partnerships, to become the lead integrators.
Views expressed above are the author’s own.
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