CNBC-TV18: "The muddle through syndrome in Indian defence"

Union finance minister Nirmala Sitharaman presented the union budget for FY2020-21 on the floor of the Parliament on February 1, 2020. While the budget is still undergoing autopsy by policy analysts and opinionmakers, the most disappointing of the sectors, that were allocated resources, has been 'national defence'.

Union budget for national defence for FY2020-21 stood at Rs 4,71,378 crore ($70 billion approximately), out of which budget for the armed forces and DRDO stood at Rs 3,23, 053 crore ($46 billion), defence pensions accounted for Rs 1,33,825 crore ($19 billion) and civil expenditure was Rs 14,500 crore ($2.1 billion).

Under the normal convention, the finance minister lays out details of the defence budget and also makes a reassuring statement that additional resources would be provided to the ministry of defence as and when required. Neither happened this time, data on national defence were simply put in the budget papers.

On the surface and analysed purely from available data, the budget for the national defence this year has been disappointing, having registered a very negligible increase of less than Rs 7,000 crore from previous year’s revised estimates, although allocations for defence pensions have skyrocketed from previous year’s Rs 1,12,080 crore to Rs 1,33,825 crore this year.

While defence pensions have witnessed impressive growth over the years, it is disheartening to see the budget for capital expenses (primarily used for equipment modernisation) has been stagnant at Rs 1,13,734 crore this year (previous year’s revised estimates stood at Rs 1,10,394 crore).

Growing pension liabilities have visibly impacted equipment modernisation efforts for the past few years, with a growing 30 percent gap between 'committed liabilities' (money earmarked for previous weapon and equipment purchases) and modernisation budget. Efforts to trim revenue as well as pension liabilities and correspondingly increase capital the outlays to make Indian forces a 'lean, mean fighting machine' have failed, rather the opposite trend is visible for the past few years. This is not only alarming but also worrisome, to say the least.

Resources allocations for national defence may appear deficient, but a larger picture of cumulative resources devoted toward meeting all spectrum security challenges paint a different story. Resources for national defence (MoD), internal security (MHA), resources for military and security dimensions for atomic energy and space together account for a quarter of central government expenditure. Allocations for J&K and Ladakh (approximately Rs 37,000 crore) have added new dimensions as a reasonable amount of these will be spent for security purposes. Important to note here is that even such a reasonable allocation has happened under trying economic circumstances.

Three fundamental questions are placed and possible answers attempted here: a) Is India witnessing an era of 'muddle through syndrome in national defence'?; b) if the answer is yes, is this phase likely to continue well into future?; and c) what are the measures India ought to make in order to take its military might further? Answers to each one of these questions would always be predictively subjective, even when microdata is available and bulk of national defence and security-related data are not available for obvious reasons. In any case, India has always been a data-deficit state, unlike its Western counterparts.

Yes, India is muddling through in its defence sector. Resources allocations actually appear reasonable, but imbalanced priorities heavily weighed in favour of revenue and pension liabilities that call for more structural reforms within the sector. Yes, the phase is likely to continue in the near future unless the imbalance is corrected, but equally importantly, there is a dire need to reduce import dependency and enhanced domestic production. Even if a global economic turn around happens and so does Indian economic scenario, which is highly unlikely, a sudden spurt in defence expenditure would bring in accompanying aspirational demands. A caution is thus warranted.

Three sectors – higher defence organisations and mechanisms; equipment and services-led modernisation; and domestic production – all of which are undergoing ideational and structural reforms must continue with defined objectives. Financial resources are critically important in appropriating such objectives, but judicious applications of resources are what Indian defence planners need the most.

(Deba Mohanty, Vice President, Society for the Study of Peace and Conflict, New Delhi). 

Views are personal. He can be reached at debamohanty@sspconline.org

[Originally published in CNBC-TV18. For the complete article, Read Here. ]