Cap spending, risk modernisation

What inevitably suffered was modernisation, generating a massive backlog that now threatens wide-ranging obsolescence. Fortunately, financial-budgetary management of Defence leaves serious concerns for a country like ours where resources, by definition, must remain scarce. But, with $74 billion reserves, we have created unique records with large unspent funds in Defence for three years running. The current budget shows an unspent amount of Rs 8,685 crore in the current year!

In other words, like the past three years, 13 per cent of the allocations for Defence have remained unspent — or we may call it ‘‘economising’’ in cutting Government spending — in spite of the extra expenditure for the year-long mobilisation of Defence forces. The problem is that the actual expenditure may well show an even greater gap.

For example, in 2000-01, we ended the year actually with Rs 8,965 crore (not Rs 4,126 crore as reflected in revised estimates) unspent from the allocations made at the time of sanctioning the year’s budget. What was worrying was that nearly one-third of the capital expenditure which contributes to most of the modernisation process remained unutilised. Since then we have repeated this performance.

But what should worry everyone, except those across our borders, is that we have been surrendering nearly 30 per cent of the budget under the capital (modernisation) head every year now for three years. Either our planning is persistently poor or our decision-making in the modernisation drive is fundamentally at fault. Two years after top-level ‘‘reforms’’ especially in procurement decision-making, this remains unexplained.

Large sums of unspent allocated funds have two major implications. First, it reflects adversely on financial management. Secondly, in our case, it also tends to mask overspending in non-Defence areas distorting conclusions.

But the implications for national defence are even more critical. Four Defence modernisation goals should guide our thinking. First, the level of conventional military capability that we now need in view of nuclear weapons being around has to be significantly higher than what we might have needed in earlier years. Second, superior technology has always influenced the outcome of a war. But this has been assuming an over-riding dimension in recent decades as all the recent wars indicate. Thirdly, force modernisation trends worldwide point towards the drive towards enhancing capabilities to undertake high technology warfare. Fourth, creating and using coercive force for political purposes must be based on long-range strike with escalation dominance and control capabilities.

Strategic and technological logic demands that our capital expenditure should have grown from the current 30-odd per cent of total expenditure to a figure closer to 40 per cent to cater for high-technology systems. Stagnating modernisation goes against all these trends. Spending Rs 65,000-odd crore would start to be infructuous if we cannot ensure that the military is equipped properly to fight and win the next war, if and when it takes place. This would also provide the deterrence needed to ensure that a war does not take place.