For the second year in a row, modernisation of the armed forces is set to take a major hit with a minimal hike announced in the interim budget that is not even likely to be adequate to cover the rising inflation rate as well as the devaluation of the rupee.
The 10-per cent hike, taking the allocation to Rs 2.24 lakh crore, is mainly geared to meet expenses on the revenue side — an increase in pensions as well as wages of soldiers. The capital budget that is meant to procure new arms and weapons systems has been increased by a paltry Rs 2,847 crore to Rs 89,587 crore, up just 3.2 per cent.
What this means is that a major chunk of the major procurements that had been planned and deferred from the current financial year — including the multi-billion dollar deal to purchase new generation fighter jets — have not been budgeted for.
In fact, in dollar terms (more than 70 per cent of India’s arms are imported) the budget for new weapons systems has actually gone down to $14.49 billion this year against the $16 billion allocated last year. This is set to adversely impact the procurement of several major weapon systems including transport and attack choppers for the Air Force, submarines for the Navy and fighter jets.
On the contrary, the revenue budget of the three forces have increased by over Rs 14,000 crore, besides a hike in the pension bill from Rs 45,500 crore to Rs 50,000 crore this year.
As the record shows, in the current financial year, no major defence deal for a new system has been signed by the government. In fact, as first reported by The Indian Express, the government transferred out a chunk of the capital budget under the revenue head this year to meet rising fuel costs as well as salary hikes. The budget document shows that Rs 7,868 crore was moved out of the capital budget by the government this year.
In terms of a ratio against the GDP, this year’s defence budget is pegged at an all-time low of 1.74 per cent. This is against the historic low of 1.79 per cent that was allocated last year.
One rank-one pension: Timing raises doubt
The Finance Minister’s announcement that the government has “accepted the principle” of one rank-one pension (OROP) for the armed forces is being touted as an achievement of pressure by Congress vice-president Rahul Gandhi but has raised scepticism among ex-servicemen who have been campaigning for the parity for years.
The timing of the announcement that the government will close the pension gap for all retirees of the armed forces, that has come in the interim budget, has raised doubt, with several serving and retired officers expressing their doubts on the government’s intention.
The UPA government has been fighting against the OROP principle for the past five years and the delayed announcement of acceptance comes at a time when it is not in a position to implement the decision. The Finance Minister has announced the transfer of a “sum of 500 crore to the Defence Pension Account in the current financial year itself” to meet the demand.
He has also said the yearly outgo to meet the demand is Rs 500 crore. However, the defence forces are up in arms against what they call misleading figures and fear that the actual implementation may not be the full OROP they have demanded. As per the estimate of the Defence Ministry itself for the 2011-12 financial year when the matter was being debated, the yearly outgo was pegged at at least Rs 1,300 crore. Senior officers say as per the current estimates, the yearly outgo, if the demand is fully met, is over Rs 1,700 crore.
“We are still not sure if the government is going the full way. The fine print has to be seen as the financial outlay is definitely not enough to meet the requirements of a full pension parity,” a senior officer said, adding that the UPA had been in a position over the past three years to implement the OROP and iron out differences but chose to delay the matter till just before the elections.
The ex servicemen community has also expressed scepticism on the matter with prominent leader Lt Gen (retd) Raj Kadyan who led a large scale movement on the matter a few years ago, saying the thousands of medals that retired soldiers had surrendered to the government as protest would be taken back only after a full implementation of the OROP.
After the announcement, Rahul sought to claim credit. In a hurriedly called press meet at 10 Janpath, he said, “A number of delegations have met me on one rank one pension issue in last many days. All of them said it is a very necessary and historic step. Our forces are always ready to fight for the nation and people…It is our duty that we provide them all support.”
BJP PM candidate Narendra Modi, while welcoming the decision, took a dig at the UPA government in a tweet. “I welcome the decision on ‘One Rank, One Pension’ for our servicemen. Belated wisdom finally dawns on our ‘hard working’ UPA ministers,” he wrote.