Better budgeting for defence

The Union Budget 2017-18 had something for everyone except the armed forces. Defence capital allocation meant for modernisation was abysmally low, reflecting persistent neglect to meet a two-front threat which constitutes real and present danger. So unmindful is the government that there is practically no provision for additional capability creation to catch up with the burgeoning gap with China, the ultimate challenge. The funds allotted (Rs 86,488 crore) for modernisation will barely suffice to meet carry-over liabilities of aircraft and guns previously contracted and the upkeep and maintenance of the military, given the oil price rise, the dollar/rupee fluctuation, and inflation. Funding, in fact, is not the real problem. Finance Minister Arun Jaitley says that the defence cannot even utilise the amount given to them for modernisation. Inference: so we under-provide. But then the question is: what have the current and previous governments done to facilitate optimum utilisation of capital account which would enhance military deterrent, at present below par.

There are also hidden issues. Over the past two decades, nearly Rs 90,000 crore was returned from the capital account, mostly on demand, to North Block to balance the fiscal deficit. Former Defence Secretary Ajay Prasad (2003-04) has famously said he used to receive a call in December from his counterpart across the road to earmark Rs X thousand crore for a return to the Finance Ministry. Making under-utilisation the reason for under-allocation is curious logic. Worse, no endeavour for any corrective action has been made to spend wisely and on time. Clearly, there is a strategic disconnect between the defence and finance ministries and this is surprising as the BJP is reputed among the military to be the one party which cares for soldiers and a robust defence. While it has implemented OROP (One Rank One Pension), the anomalies-ridden Seventh Pay Commission award has not been finalised for the defence forces as hundreds of officers have gone to court. Many soldiers are highly disillusioned with the government for a flat budget reflecting overall lethargy in streamlining defence procurement procedures. Ad hocism prevails. It is arming without aiming. Witness Prime Minister Narendra Modi overturn the three-year long civilian bureaucracy-led price negotiation for 126 Rafale jets in favour of 36 Rafales one fine morning. The capability gap is likely to be filled up with Make in India F16s or better still Swedish Gripen single-engine combat aircraft. But who knows, Rafale may be back; so warped is our planning.

There is not one good word for the defence budget, which, despite a 7 per cent GDP growth is one of the lowest — at  1.63 per cent of the GDP  — comparable with the 1962 Himalayan debacle when the Standing Committee on Defence had recommended spending 3 per cent of the GDP. The truth is, our politicians think of the armed forces only in times of war or national calamity. Before this government took over, defence allocation was at least solemnly mentioned by the Finance Minister in his Union Budget. He would proudly say to the accompaniment of loud thumping of desks: ‘I now come to our brave soldiers who defend our borders’. He would make the necessary allocation and add: ‘more money would be provided if needed as no price is too high for the security of the country’. In 2016-17, defence was altogether omitted from the Union Budget speech. This year, it was mentioned in passing with two innocuous references to online rail travel booking and pension payment.

Still, PM Modi has not missed overstating the surgical strikes by the Army. He has said the country can never repay the soldiers for their grand feats; and yet, when it comes to securing their status vis-à-vis central services or enhancing their deterrence through accretions to defence capabilities, he is silent. A US Stimson Centre report has said: “From a strategic perspective, the mismanagement of the Indian defence budget will prevent the military from releasing its full potential’’. Modi needs to understand that his vision of growth and development has to be backed by robust defence and security. The defence leg is badly fractured.

The author is a founding member of the Defence Planning Staff