PRIME MINISTER Narendra Modi has described the 2018-19 budget as “farmer friendly, common citizen friendly, business environment-friendly and development friendly.” But is it defence friendly?
The defence outlay at Rs 2,95,511 crore has seen an increase of 7.81 per cent from the previous years budget, which stood at Rs 2,74,114 crore. The allocations are hence just about adequate to meet the current needs of the Armed Forces but would do little for any meaningful forward movement in the modernisation programme of the Forces. In terms of GDP outlay, the budget presented by the Finance Minister shows a decline from earlier years and works out to just 1.58 per cent of the projected GDP for 2018-19, the lowest such figure since the 1962 war with China. It has long been the contention of defence analysts that the modernisation process would require a sustained investment for over a decade at 2.5 per cent of GDP, to effectively deal with the collusive threat India faces from China and Pakistan.
But perhaps, the budget cannot be seen entirely through the security prism. There is a need to strike a balance between India’s need for economic growth and the well-being of its citizens. Investments to improve people’s health, education and skill development are vital for long-term growth prospects of a country, and the budget has rightly focused on them. It addresses the aspirations of a modernising nation through multiple initiatives, which would have a dramatic impact on the growth of India’s GDP. Thus, even the present allocation of the defence budget in GDP terms would result in higher outlays for defence, as India’s GDP rises to double its present level.
More importantly, the government has announced measures to push its ‘Make in India’ programme, including plans for two Defence Industrial Corridors and a new industry-friendly Defence Production Policy in 2018. This is likely to give a fillip to the creation of a defence industrial base, which will contribute positively to the modernisation programme and help fill the strategic void in some of the armaments which India has to currently
import. Of the two defence industrial corridors, the first of these is likely to come up in the Tamil Nadu-Karnataka area.
On the flip side, India’s defence budgets over the years have shown a discernible trend of declining modernisation outlays for new projects, with almost 80 per cent of the outlays earmarked for "committed liabilities”. This refers to payments for arms, which had been contracted in earlier years. The ratio of capital expenditure to revenue expenditure also appears to be skewed. Ideally, it should be in the ration of 50:50, but as of now, the defence budget on the capital head is Rs 99,563.86 crore, which is barely 33.7 per cent of the defence budget, with the expenditure under the revenue head at Rs 1,95,947.55 crore taking up the remaining 67.3 per cent. The major chunk of revenue expenditure is manpower costs, and for the Indian Army, which is manpower intensive, the capital to revenue expenditure ratio is as low as 17:83. This makes it well nigh impossible for the Army to discard obsolescent vintage weapons and equipment in service, which in turn degrades its operational capability. This is a matter of concern, especially as China is modernising its military at a brisk pace.
On the plus side, the government initiative to improve infrastructure on India’s eastern borders with China is a welcome step. The Finance Minister stated that the Rohtang tunnel has been completed to provide all-weather connectivity to the Ladakh region and that the contract for construction of the Zozila Pass tunnel of more than 14 kilometres is progressing well. He further stated that the government is now proposing to take up construction of s tunnel under the Sela Pass in Arunachal Pradesh.
As per the 13th Defence Plan, Rs 12,88,654 crore has been projected for the capital outlay and Rs 13,95,271 crore for revenue expenditure. There is also a separate section in the plan on "capability development" of the strategically located tri-Service Andaman and Nicobar Command, which was set up in October 2001 but which has suffered from relative neglect, lack of infrastructure and turf wars. This was a much-needed step and is a welcome addition to improving force capability to exercise control in the Indian Ocean Region.
In the final analysis, however, India’s defence preparedness will come about not so much from its defence allocations as from its ability to manufacture the major portion of its defence needs indigenously. This remains an imperative requirement for India, for which the DRDO, the private sector, as well as the defence public sector, has a huge role to play. Will India rise to the challenge? Only time will tell.