Next week, the Union government will place an interim budget before Parliament. There is the natural temptation to make a pre-election interim budget more attractive for the voter and ignore uncomfortable issues, however pressing they may be.
The defence budget falls in this category, especially since there is seemingly no pressing security threat before us. But that should provide little comfort. Today, the flames of wars — in West Asia and Myanmar — are lapping on India’s shores. Other threats in the new domains of warfare — cyber, electromagnetic, space and information — are looming large. The Chinese challenge is exemplified by an unresolved standoff along the Line of Actual Control (LAC). In the words of Army chief, General Manoj Pande, the situation along the LAC remains “stable, yet sensitive”. Pakistan may be down and out, but its challenge across the Line of Control in Jammu and Kashmir has not reduced. The incidents in the Poonch-Rajouri area are evidence of this.
In this context, it is important to understand the nuances of our defence spending. The Union budget pays for maintaining the Army, Navy and Air Force and provides support to defence public sector units and the research and development related to defence. This is an expensive business given the size of our Army and the need for equipment-intensive services such as the Air Force and the Navy.
India’s defence expenditure as a percentage of Gross Domestic Product (GDP) has been drifting downward and is now below 2%. Almost a quarter of this budget is taken by pensions and India imports an unconscionably high proportion of high-end defence equipment. It is not surprising that budget allocations end up being lower than the projected needs of the armed forces. Some of these are fixed — salaries, pensions, and maintenance of facilities and equipment.
But the budget also includes money for acquiring new weapons, warships and aircraft, as well as building roads and other facilities that come under capital expenditure and can be flexible. Unfortunately, this flexibility plays out negatively and the one area that takes the hit in times of short budgets is capital expenditure. The Army’s budget in 2023-24 shows that 70% of the 3.41 lakh crore allocation went to salaries and pensions, while modernisation accounted for just 9% and maintenance of existing equipment received 10%.
The fact is the armed forces get substantially less than what they ask for. In 2022-23, the amount was 28% lower than what had been sought. Since salaries and maintenance cannot wait, the casualty is capital expenditure, which means new equipment. This is the story budget after budget. This has had a significant impact on delaying the modernisation of our armed forces.
In 2018, the then vice-chief of Army staff, Lt General Sarath Chand, created a sensation of sorts when he told a parliamentary committee that “Nearly 68% of our (the Indian Army’s) equipment is of vintage category, with just 24% in the current and 8% in the state of art category”. A year ago, speaking on the eve of Army Day in January 2023, current chief General Manoj Pande said 45% of the equipment was vintage, 41% current and only 12-18% was state of the art. He expressed the hope that India would have a state of the art military by 2030. But that would require a substantial boost in capital expenditure.
It would be unfair to blame the government for the state of affairs. Even though declining, defence accounts for 13% of central government expenditure, the largest among all the ministries. This government has spent an unprecedentedly high amount of money on civilian infrastructure and welfare measures. It has also taken tough, and some would say drastic, measures to curb expenditure including an outright ban on the importation of hundreds of systems. To deal with the burden of pensions, which account for almost a quarter of our defence budget, the government has forced the armed forces to accept the Agniveer scheme, in which 75% of the recruits are discharged after four years with a one-time payment. It is not clear whether the scheme can meet the needs of the services because four years is too short a time to develop the skills required in today’s increasingly high-tech military.
Neither the interim budget nor the regular one by themselves make a difference to this predicament. India needs not just money, but effective political direction to move ahead. There is a need for the political class to involve itself deeply in discussions that take place around it and give directions that are in line with the resources it can make available.
In all fairness, the government’s record is not that bad. It ordered the military to change its orientation away from Pakistan towards China. It also cut through the proverbial Gordian knot to appoint a Chief of Defence Staff (CDS). However, more attention is called for. Besides the issue of the money apportioned for defence, the political leadership needs to provide sustained attention and take the Indian military to the next stage, where it is organised as theatre commands. Leaving it to the CDS has not worked, just as it has not worked in other countries. It needs political attention and direction.
Manoj Joshi is distinguished fellow, Observer Research Foundation and co-editor of In Hard Times: Security in a Time of Insecurity. The views expressed are personal
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