(an old article published earlier in Sachikhabar.co.in)
By Colonel Awadhesh Kumar,Veteran, Special Forces
Finally the Integrated HQ of The Defence Services is being seen to have taken control of the planning of Indian defence expenditure. This is a really good step in the interest of the Country in general and the three defence forces in particular.
During Unified Commanders’ Conference this year, the Indian military has rightly asked for an allocation of nearly Rs 26.84 lakh crore for the next 5 years.
This amount which is almost triple of the previous five years’ allocation may Suddenly look excessive, if viewed as a stand alone figure.
However when seen in conjunction with the negligible amount spent on modernization and up gradation of weapons, equipment and infrastructure from 2002 to 2014, this will still be much less than the ideal amount.
This amount on annual basis will work out as 5.368 lakh crore and is just the double of the defence budget of 2.74 lakh crore allocated for the current year.
The numbers may look staggering to a lay man but not when you compare this with the amount looted in various scams in India by the Netas and the babus individually or in cahoots of each other. Please have a look at some of these figures:
• Total value of Scams since 1948………73 00000, 0000000 crores
Some major scams between 2002………2014
• Stamp Paper Scam( Telgi ) 2002………30000 crores
• Orissa/ Jharkhand mining scam 2008………….24000 crores +
• 2 G Spectrum Scam………60000 crores +
• Estimated black money in Swiss banks…………7100000crores
• Tax default (Hassan Ali)………50000 crores
• Teak plantation swindle………8000 crores
• Satyam scam………10000 crores
• Submarine scam………19000 crores
• Coal Scam………185600crores
• UTI & Ketan Parekh scam………6000 crores
Now lets look at it from another angle. In 2015,Indians spent nearly 150,000 crore on liquor of all types and 160000 crores on tobacco of all types. So they should not mind spending double this amount on annual basis on defence. At current levels, defence expenditure in India constitutes just 2.1 per cent of the GDP.
Assuming a 10 per cent nominal growth in GDP, the demand for 26.84 lakh crore represents 3.3 per cent of total GDP generated over the next five years. Though, expenditure overnight will not increase from 2.1 per cent of the GDP this year to 3.3 per cent next year. They will go up gradually only.
However, that also means, given the same numbers after five years we will be in a position to bring it down to a very comfortable level of just 3% or.even less of the GDP. In fact by 2022 our GDP itself will have increased to a much higher level especially when calculated in PPP.
There have been very few countries that could manage to sustain such levels of 3 per cent of GDP over 4-5 years in the late 80s. However for India all indicators including a robust political decision maker are highly positive.
Next, we can check the above numbers on a global comparative basis. There are two benchmarks typically used. First, defence expenditure as a percentage of GDP, popularly used. As per the SIPRI, the numbers look up as follows: China 1.94 % Republic of Korea 2.7 %, Pakistan 3.55 %, Russia 5.3%, Turkey 2.13 %, Israel 5.8%, Singapore 3.2% and US 3.33 %.
Keeping in mind that all figures of China is always a suspect, India’s projected expenditure is very much valid in the present security scenario and also to enable its defence forces to make up for 10 long neglected years from 2004 to 2014.
With both China and Pakistan virtually on the war path with complex military challenges, Afghanistan still smouldering, ISIS trying to give a knock Eastward, piracy problems in the IOR, our defence expenditure certainly needs a boost.
We also have to learn from other major countries that spend significantly more than India— US, Russia, Israel — they have very large domestic Military Industrial Complexes (MIC).
Military expenditure accounts for large investments and employment in these economies. Therefore we have to streamline our defence PSU and make them not only modern, efficient and competitive but also export oriented.
We also have to give a huge boost to our Private Sector and make them an integral part of our defence manufacturing set up. Right steps have already been initiated in this regard by our current Govt.
The Second criteria to compare the Defence Expenditure is to see it as a share of expenditure in the total government expenditure — less popular, but a lot more insightful for policymaking, as it reflects the total fiscal.
The union budget for 2017-18 is for 21.47 lakh crore but in addition there is nearly a budget of 29 lakh crores being spent by the States on development and welfare. Thus the combined Govt expenditure by India for 2017- 18 comes to 50 lakh crore +, certainly a good amount.
Out of this, the Country’s defence budget is only 2.74 lakh crore or just 5.84 % of the total. So India certainly spends a very meagre amount of government revenues on defence, even if defence is the single biggest item in the Union Budget, outside of debt servicing.
Therefore in the current complex military scenario of virtually “two and half front”, the half front referring to internal Security, the amount spent by the Union in combination with the States can certainly be increased to 10%. With the new fiscal policy in place now the combined share of the States in revenue sharing is higher than the Centre. In fact Pakistan is spending nearly 19% of its annual budget. Figures for other countries are given below :
Lastly, India’s high import-intensity of defence expenditure needs to be changed with increasing MAKE IN INDIA, giving way to MADE IN INDIA together with maximum possible export of defence items. From the highest importer of defence items we need to compete with US and Russia in export.
This will give a solid boost to the economy. With larger percentage of defence capital expenditure spent on indigenous items and reduction of military imports to just single digit, the Govt will retain the ability to allocate even a higher budget to defence in time of emergencies.
One last thing, this demand projection by HQ IDS for next five years shows that things are indeed changing and defence planning is now firmly within the grips of the Forces. This together with a quantum jump in the Financial Powers vested with the TOP BUDGET HOLDER in the three Services…..The VCOAS, The VCAS and The VCNS, at least for certain Heads of Expenditure, it seems that there is a bit of shift taking place in the MoD. The dynamic balancing will find its equilibrium only after the appointment of CDS is made and he consolidates his position.
Till then many a self styled defence experts and Financial Pundits including the hidden snakes in Lutyens Zone (including the South / North Blocks) will keep whining and even spitting venom against the Govt and the Defence Services for the “high level “ of projected defence expenditure.
Some such self styled experts are even calling this projection of Rs 26.84 lakh crore as pipe dream rather than effective plan and projection. On top of that, they have severe issues even with the quality of military spends.
They forget that all the PGMs and all the latest gizmos being used in Afghanistan and Iraq has not helped the Americans in solving the issues, they simply need more boots on the ground to resolve the same……a resource they lack severely.
As per these SS experts in the last 5-6 years, 45-50 per cent of the defence budget has been spent on personnel costs that is salaries and pensions.They feel that Forces are not Insurance bonds to be purchased by the Nation at a premium but mere chowkidars to be paid some pittance.
They are also unhappy that this component is likely to grow thanks to more “boots on ground” required to physically guard our various areas along the Himalayan Border which till date remained unguarded. Indian Army has expanded by 25 per cent in the last 15 years and needs to expand a bit more with a Mountain Strike Force for Ladhak area too.
The venom comes out truly when such snakes state “ now the new big daddy of Budget Expenditure is OROP. Increase in personnel costs in the years to come would far outstrip nominal GDP growth “. Such statements are made by these snakes with backing of fudged figures and half truths mixed with complete lies.
To make OROP vanish (it is not a big amount in any case), it is not the Indian Defence Forces which have to be Vanquished but one has to just make Article 51D of the Constitution applicable to all those seeking job with Union/State Govt / PSUs. Once they render minimum military service of 5 years then they can be moved in a seamless manner to their new posts.
Now time has also come for the military leadership to interact directly with the elected political leadership in all matters military with no bureaucracy or any extra constitutional authority in between.
All required structural changes and amendment of Blue Book must be made in MoD and higher politico-defence management organisation to ensure that India stands firm against any Doklam today or in future.
