Defence Budget 2020-2021

February 10, 2020 By Lt. General P.C. Katoch (Retd) Photo(s): By PIB
The Author is Former Director General of Information Systems and A Special Forces Veteran, Indian Army

 

Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman departs from North Block to Rashtrapati Bhavan and Parliament House, along with the Minister of State for Finance and Corporate Affairs, Anurag Singh Thakur and the senior officials to present the General Budget 2020-21, in New Delhi on February 1, 2020.

Presenting the budget for FY 2020-2021 in Parliament on February 1, Finance Minister Nirmala Sitharaman did not mention defence at all, which isn't surprising given her attitude towards the Armed Forces. But the budget figures made public reveal that indeed she has achieved a milestone by allotting the defence budget at mere 1.43 per cent of the GDP – the lowest by the BJP-led government since 2014 or for that matter one of the lowest since the 1960s. This at a time when the threats to India are rising, the Naval Chief has decried the paucity of defence allocation, Prime Minister Modi addressing the NCC rally on January 28 stated that India can defeat Pakistan in 10 days, and Nirmala Sitharaman in her budget speech claimed "national security is a top priority for the top government" – what a sense of priority with these poor funds? The government appears confident that requisite security and super power ambition can be achieved through economic growth (which is slowing) and diplomacy. Defence has therefore been pushed into still lower priority amidst the ambitious sloganeering for a $5 trillion economy by 2024, most of which is speculatively delusional.

The defence allocation for FY 2020-2021 stands at 323,053 crore ($45.2 billion). There is the usual cry about rising pension budget though allocation of pension budget is always separate and pension going towards civilian defence employees is deliberately not mentioned because it is proportionately much higher than military veterans considering their numbers. Life expectancy is rising but it is also a fact that Armed Forces are denied NFU, full OROP has not been granted to veterans and BJP has not even kept its promise of five-yearly review of OROP that was due in 2019. IT exemption authorised to disabled since 1922 has been withdrawn for those who continued to serve and now the FM has withdrawn tax exemption on PPF and LIC policies. Getting back to the defence allocation for FY 2020-2021 of 323,053 crore, this is 17,757 crore more than the previous FY and small increase by 6,767 crore in what Armed Forces had received under Revised Estimates last year. The Defence Minister has nothing to say about the defence allocation for FY 2020-2021 and neither does the newly appointed CDS. Of the 323,053 crore, 113,734 is earmarked for procurement of new weapons and equipment and building capabilities of Armed Forces, which is only 3,339.69 crore more than the RE for fiscal 2020. The balance 209,319 crore will go towards revenue expenses; like, maintenance of infrastructure, replenishing existing weapons and equipment and for capacity building.

In the 2020 fiscal, under revised estimates, government has given 205,901.76 crore ($28.79 billion) for revenue expenses. Next fiscal (2021) another 14,500 crore will be spent on civilian establishments within Ministry of Defence (MoD) and 133,825 crore on pensions. 32,392.38 crore is earmarked ($4.5 billion) for Army's capital expenses. Army is acquiring six Boeing Apache gunships and negotiating follow-on order for the 22 Apaches bought by the IAF. 4,000 crore are to go towards buying Army's aviation assets. The Navy is allotted 26688.28 crore ($3.73 billion) for new purchases, some 12,746 crore would go towards building up the naval fleet. In 2016, government had ordered 36 x Rafale fighter jets, deliveries of which began in October 2019. The budget for aircraft will go towards committed liabilities like the Rafale fighters. Capital allocation for IAF in next fiscal is 43,281.91 crore, which is 1,587.23 crore ($222 million) less than the current fiscal's RE. 26,909.88 crore will go towards aircraft and aero-engine purchases in 2020-21. There is recurring talk of induction of new technologies but the corruption, work culture and various unions aligned with multiple political parties including the Congress, BJP and the Left deter optimizing the considerable private sector potential in Artificial Intelligence, Robotics, Unmanned Systems etc. the 8000 crore earmarked in the FY 2020-2021 budget for quantum communications will also likely get consumed largely by the DRDO-DPSUs-PSUs in similar fashion.

There is news of HAL tying up with Israel to produce armed drones, where contribution of HAL may just be that of the rubber stamp. If we had permitted the private sector to flourish, we would have had indigenously produced armed drones years back. As of now, the Army has little finance allocation for modernisation in many of its weapon systems, platforms, artillery, air-defence, some of which are critically required to make up the deficiencies. The IAF is down to 30 squadrons against the required 42 squadrons. The Navy's need for more warships, submarines and unmanned systems needs no emphasis given the dynamics in the Indian Ocean Region, particularly the China-Pakistan nexus and Chinese consolidation in the IOR including development of ports and bases. There has been speculation about a two-front war – whether such eventuality will occur at all or we will be able to reduce it to one front. This is playing the ostrich with its head in the sand because this cannot be of our choosing given the character of our two main adversaries. The defence allocations are grossly inadequate to meet such contingency. Absence of adequate focus on defence also reduces our capacity at the bargaining table where rhetoric for public consumption at election rallies is ineffective. Prudence demands India to be prepared for not just a two-front war but war on three fronts given our internal situation – unbridled population growth, rising unemployment, multiple insurgencies and political parties ready to sacrifice national interests in their hunger for power.