Budget 2012: Where is the fire power?

India has not paid sufficient attention to its defence and security needs. Faced with deteriorating finances, acute fiscal distress, huge shortfall in tax collection and disinvestment, as well as miscalculation of subsidies, the government had decided on an unusual step: cutting the defence budget for this fiscal. The Centre proposed a cut of ‘a few thousand crores’ in the defence budget of 2011-12. The Ministry of Defence had ordered the three services to surrender Rs 3,052 crore unspent money in March.

Alarmed, Chief of the Army Staff  General VK Singh wrote a letter to defence minister AK Antony saying that the war-waging capability of the army has been ‘seriously degraded’ with the government dragging its feet on procurements and policy measures. Antony convened a defence review committee meeting where the three service chiefs, defence secretary and the NSA were present.

Consequently, on March 15 the government hiked military spending by over 17.63% (1.9% of GDP) to Rs1,93,407 crore. In real terms, this increase amounts to Rs28,992 crore in the total outlay for defence compared to Rs1,64,415 crore for the previous year.

It also announced a raise in the capital expenditure of the armed forces to Rs79,579 crore, a 15.7% hike from last year’s capital allocation of Rs69,199 crore. Also evident from the figures is that inflation and the slide in the value of the rupee have caused the military’s modernisation budget to be effectively reduced for the first time in decades. More worryingly, India’s dependence on foreign weaponry could continue with R&D expenditure slashed in real terms.

The biggest worry is the army’s slowdown in modernisation. The army has got the lowest share of the capital budget — Rs18,228 crore — for modernisation. While the army heavily overspent on purchases of aircrafts and aero-engines and heavy vehicles last fiscal, almost Rs2,000 crore earmarked for ‘other projects’ like artillery purchases could not be utilised. The proposal to buy 145 ultra light howitzers from the US is also progressing. Purchase of 1,600 numbers of 125 mm smooth barrel T-72 tanks is overdue.

The navy has got a significant amount of Rs 13,617 crore for modernisation of its fleet with several new warship acquisitions in the pipeline. The navy is budgeting for the impending contract for Project 17A frigates that will be built in Mazagon Dock Ltd, Mumbai, and Garden Reach Shipbuilders & Engineers Kolkata.

It is also making annual payments for several ongoing warship programmes: Project 28 anti-submarine corvettes being built by GRSE; and Project 75 Scorpene submarines, and Project 15A and 15B destroyers being built at MDL. It is paying Boeing for the P8I Poseidon multi-mission maritime aircraft being built in the US.

The IAF will get over Rs29,853 crore. India is on the verge of signing a whopping $20 billion contract for 126 Rafael medium multirole combat aircraft, which will come into service by 2016 in tandem with 250 fifth generation fighters jointly produced with Russia joining by 2018 apart from a $600 million deal for 75 Pilatus PC-7 basic trainer for its air force. It is also making annual payments for the earlier contracts for the American C-130J Super Hercules and C-17 Globemaster III transport aircraft and upgrade of 51 Mirage-2000 combat jets.

DRDO, India’s main source of indigenous defence systems, must also make do with less. In rupee terms, the R&D allocation of Rs4,640 crore for 2012-13 just about matches last year’s R&D spend of Rs4,628 crore. 

Earlier this month, China announced it would spend $106 billion (670 billion Yuan) on its military in 2013. Defence experts estimate that Beijing actually spends 50-100% more than the declared figure. 

India, in contrast, also has a booming economy but it has been niggardly in its defence expenditures, as defence expenditure is made subservient to political-populist schemes. Capital acquisition of critical military hardware is delayed for decades due to political indecision, bureaucratic lethargy and other considerations, which view capital acquisitions of critical military equipment from abroad with extraneous perspectives.

The writer is a defence analyst andcommentator l vasu022@gmail.com