Not On A War Footing

The defence budget, 2017-18, raises serious concerns

Written by Amit Cowshish | Published:February 14, 2017 12:14 am
defence budget, arun jaitley, union budget, defence budget 2017, defence budget highlights, indian army, indian navy, indian air force, underutilization in defence, defence ministry, finance ministry, indian express editorial Photo for representational purpose

Having made no reference to the defence budget in his budget speech last year, much to the chagrin of many, Finance Minister Arun Jaitley made an almost passing reference to it when he presented the Union budget on February 1. At Rs 2,74,114 crore, excluding the outlay of Rs 85,740 crore for defence pensions, the allocation is prima facie inadequate, though not surprising.

In his medium-term fiscal policy statement last year, the FM had stated that the total defence expenditure is estimated at about 1.6 per cent of GDP in 2017-18 and 2018-19. If that is any consolation, the proposed defence outlay does not disappoint at least on that score. Many defence analysts, and even the standing committee on defence, have been rooting for defence outlays to be pegged at three per cent of GDP — while that seems unlikely in the near future, focus on this demand overshadows many other concerns.

The first reaction has been how it would adversely affect modernisation of the armed forces. Unfortunately, repeated underutilisation of the capital budget weakens the case for higher allocations for new acquisitions. It is not uncommon to hear that underutilisation of the capital budget is because of the finance ministry’s machinations, which wouldn’t let big contracts be approved, so it could withdraw huge sums from the MoD to meet the fiscal target.

Even if this is true, the MoD needs to address this problem before it can make a convincing case for more funds. Going by the revised estimate for the current year, underutilisation of the capital budget is likely to be close to Rs 7,000 crore; for the last year, it was double. There is no doubt the allocated amount would be insufficient if all contracts in the pipeline get signed during the next fiscal. But this is not as serious as the apparent inadequate allocation for maintenance of equipment currently in use. There is an immediate requirement for funds for this purpose. This is also the case with war wastage reserves, including ammunition stock. The allocation on this for 2017-18 is largely the same as last year — it is difficult to visualise how the situation is going to be managed.

There has been focus on “Make in India” in defence as well. An important component re projects that can be undertaken by Indian industry for indigenous design and development of prototypes of defence products with government funding. Since its introduction, no development contract has been signed so far for any “Make” project and with a meagre allocation of Rs 44.63 crore for assistance to prototype development, it seems the MoD isn’t expecting many projects.

The budget is not just about numbers. It is also a statement of the government’s vision. It is intriguing that while the finance minister chose to refer to two quite innocuous schemes, the Centralised Defence Travel System and the interactive Pension Disbursement System, there was no mention of important policy issues like the strategic partnership scheme and defence technology fund. That more than 50 per cent of the total expenditure on defence will go in salaries and pensions — ironically, without resulting in high satisfaction — is also serious enough to warrant a statement on how the government intends to cope.

What is needed is an outcome-oriented monitoring of utilisation of outlays, as recommended by the standing committee last year. This is the only way to ensure that the focus shifts from ensuring full utilisation of funds to spending these wisely on the desired outcomes — there is no indication that this is going to happen in the coming year. It is possible that these impressions are wrong, in which case the ministry owes it to the services, the common citizen, and indeed, to itself, to set the record straight.

The writer, former financial advisor (acquisition), Ministry of Defence, is a distinguished fellow with the Institute for Defence Studies and Analyses

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  1. Y
    Feb 14, 2017 at 2:28 am
    Terrible report
    1. G
      Feb 14, 2017 at 9:56 am
      And what about the other communal who are not Hindu, are they with you?
      1. G
        Feb 14, 2017 at 9:56 am
        The author should thank the PM there is no loot.
        1. G
          Feb 14, 2017 at 10:03 am
          Better than country be looted by agents of Arm Suppliers.
          1. F
            Feb 15, 2017 at 3:35 pm
            With China rearming on a war footing to become the dominant military power in the world, India should wake up instead of finding all sorts of reasons not to update its forces or expand them. India's defence policies have so far been quite pathetic to say the least and everyone in the organisation(Defence Services Chiefs included) have been either ping the buck or finding some flimsy reasons not to bring the country's fighting forces to the desired level. This is apparent even at the lowest levels of warfare where more soldiers than terrorists are been killed in day to day encounters. The bottom line is that the Indians in general, (the top military and political br included) have a low value for human life.
            1. R
              Feb 14, 2017 at 9:28 am
              It appears that BALU is a Communist.
              1. M
                Mahender Goriganti
                Feb 14, 2017 at 7:00 am
                Ignore the armchair pundits of Islamic express, scare tactics and hidden agendas. Modi's gov is doing smart decisions and smarter spending in the right areas.
                1. V
                  Feb 14, 2017 at 1:53 am
                  Author is skin deep serious of defence knowledge or too naive
                  1. P
                    Parth Garg
                    Feb 14, 2017 at 8:20 am
                    Till the time Babus prepare the defence budget India will continue to be vulnerable to cross border terrorism.
                    1. S
                      Sanjay Bhattacharya
                      Feb 14, 2017 at 4:46 am
                      Thanks to UPA Govt, our armed forces were completely neglected and vision-less Govt headed by an Italian were forcing our armed forces into a weapon-less and demoralised forces. Things are rapidly changing under the present patriotic Govt.
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