With a list of weapon systems and platforms piling up over the years and even decades, and plans to deploy thousands of more battle ready mountain troops on the Sino-Indian border, the very nominal increase in Indian defence budget has dampened the spirits in defence and strategic circles. The observers are of the view that in view of the emerging strategic challenge from China and ongoing military tension with Pakistan the government should have come out with a game changer budget to provide for matching responses. But the provisions for the armed forces of Rs. 2,46,727 crore unveiled in the 2015-16 annual budget will only meet the pay and allowances of the over 1.2 million forces deployed on the varied, difficult and far-flung locations. This is only a megre 7.7 per cent raise over the previous year’s (2014-15) budget of Rs. 2,29,000 crore.

There seems to be an overwhelming consensus among the observers that this year’s defence budget has dashed the hopes of a major push of armed forces modernisation by equipping them with latest armouries. Even the much talked about and promised One Rank, One Pension for the retired soldiers found no mention in the defence budget as Finance Minister Arun Jaitley later complained that this has been because the Ministry of Defence (MoD) and armed forces headquarters have not been able to reach any consensus on the formula. According to defence expert Alok Bansal, “Only Rs. 94,588 crore has been earmarked for capital expenditure, which entails procurement of equipment, armament and platforms. This amount is almost the same as was earmarked in the last year’s budget, although it is over 15 per cent increase over the revised estimates of Rs. 81,965 crore. This may not significantly augment the defence

acquisitions, although he talked of boosting the defence sector and self-sufficiency by facilitating quick and transparent decisions in the purchase of defence equipment.”

Under the Rs. 94,588 crore provision for capital expenditure the Army share has been fixed to about Rs. 26,300 crore, the Air Force share as Rs. 33,000 crore while the Navy has been provided Rs. 33,000 crore. Though the Army is the largest force among the three services, the provision is the lowest, probably because they are less dependent on capital intensive systems, while the Air Force and Navy has been given a larger slice of the capital expenditure to cater to their bulk demands.

According to Bansal the bulk of increase in the budget is under the revenue head and will be spent on salaries and other recurring expenditure. In fact since the defence pensions have been segregated from the main defence budget but presented in the annual budget under the head of the Defence Ministry goes to defence pensions. This year’s defence pensions expenditures has been fixed as Rs. 54,500 crore which is in addition to the Rs. 2,46,727 crore provided for in the defence budget. If both are taken together the total expenditure under the Defence Ministry head will go up to Rs. 3,01,227 crore and the international think tanks like SIPRI tend to calculate these two expenditures under the defence budget. However, they forget that the majority of the defence expenditure under the defence heads go for maintaining the daily living costs of the soldiers and the bulk of the provision under the capital expenditure (which is Rs. 94,588 crore in the year 2015-16) is spent on servicing and debt repayment of the weapon systems acquired in previous years.

Even this provision in last year’s (2014-15) capital budget was not fully spent and MoD had to return to the Finance Ministry as evident from the revised estimates that was slashed by Rs. 12,623 crore to take care of the revenue expenditure to maintain the three services. In fact this has been the case over the years. The MoD is not able to fully spend the grants under the capital expenditure and by the end of March every year, the MoD usually has to return the unspent money. During the previous NDA regime, there was a provision that the unspent amount will be rolled over and added to the capital expenditure in the next year’s defence budget, as the defence purchases runs into billions of dollars and the unspent money can be spent on the initial payments of the weapons systems. The NDA regime will once again have to reintroduce this roll-over concept to create a defence purchase fund. During the UPA regime of ten years, the MoD initially under Pranab Mukherjee and then under A.K. Antony dithered on major decisions on defence purchases on many pretexts. Though the UPA regime did acquire many defence platforms from the United States under the foreign military sales (FMS) programme, tendered weapon systems remained out of bound for the three services. For example, the UPA has left undecided many big-ticket deals like the $15-20 billion MMRCA deal, the multibillion howitzers, the air refuellers, the ultra-light helicopters, etc. Now the NDA regime, once again in power, will have to decide on these defence equipments. Besides, the MoD have to take care of the acquisition process and fast-tracking of the soldier modernisation programme, the diesel submarine acquisition programme, the aircraft carriers development programme, etc. The government has also come out with an order for six nuclear submarines, for which huge funds are to be allocated to enable the Indian Navy to at least meet halfway the 24 submarine induction programme by the end of 2030.

During the UPA regime, Antony sat on many defence acquisition projects and even cancelled the projects under implementation like the VVIP helicopters and the ultra-light helicotpers programme, which almost reached on final stage of contract negotiations. If the current Minister Manohar Parrikar works on the promises of quick and transparent decision making process, his ministry would be expected to immediately clear many pending deals like the helicopters (ultra-light, heavy-lift, attack, etc) and the mother of all deals the MMRCA Rafale, the howitzer guns, the air refuellers, all of which needs most urgent attention of the MoD and if so, the government would have to provide additional funds to meet the demands of initial contract implementations.

To meet the requisite demands of the forces, the government will in fact have to provide over three per cent of the GDP of the country for the defence sector, but this year’s defence budget has just catered for annual maintenance of the equipments previously acquired and the upkeep of the soldiers, which is just 1.75 per cent of the GDP of the country, where as countries like China and Pakistan spend much more than the Indian share of total GDP. This leads to operational gaps in the combat preparedness of the armed forces. India used to spend more than 3 per cent on defence in the aftermath of 1962 China war till the decade of the 1980s, and then the defence expenditure as a share of GDP sharply declined and it has hovered below 2 per cent, going back to the era of the 1950s. Obviously the 1962 China military humiliation gave a jolt to the Indian defence establishment.

The Kargil conflict of 1999 also led to a lot of soul-searching among security czars of the country, but it seems, the government is yet to learn appropriate lessons from the shock treatments from the neighbours. Though the Finance Minister Arun Jaitley claimed that the NDA Government has been both transparent and quick in making defence equipment related purchase decisions, in order to keep our defence forces ready for any eventuality, his ministry has made provisions adequately for the armed forces. Jaitley asserted in Parliament while presenting the budget, “Defence of every square inch of our motherland comes before any thing else. So far, we have been overdependent on imports, with its attendant unwelcome spinoffs.” Stressing on ‘Make In India’ policy, Jailey said, “Our government has already permitted FDI in defence so that Indian controlled entities also become manufacturers of defence equipments, not only for us, but for export.” This is a dream for every concerned Indian citizen.