Military & Aerospace

Army Modernisation Plan Adversely Hit as Budget Cut by Rs. 5,000 crore
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Issue Net Edition | Date : 19 Jan , 2015

Modernisation of the Indian Defence Forces is a continuous process based on threat perception, operational challenges, technological changes and available sources. The process is based on a 15 Year Long Term Integrated Perspective Plan (LTIPP), Five Year Services Capital Acquisition Plan (SCAP) and an Annual Acquisition Plan (AAP). Procurement of equipment and weapon systems is carried out as per the AAP in accordance with the Defence Procurement Procedure. The Defence Acquisition Council (DAC) has cleared a total of 41 proposals since June 2014, said Defence Minister Manohar Parrikar in a written statement in Rajya Sabha.

…the Army’s plan to modernise its arsenal with the latest weaponry has taken a beating as the Finance Ministry has recently cut the budget by almost about Rs 5,000 crore, leaving that much less money to make fresh purchases.

Unfortunately, the Army’s plan to modernise its arsenal with the latest weaponry has taken a beating as the Finance Ministry has recently cut the budget by almost about Rs 5,000 crore, leaving that much less money to make fresh purchases.

Army Chief Gen Dalbir Singh on 13 January said the Army identified seven critical projects, which would be pursued for equipping the soldiers with advanced firepower and mobility. These critical projects which the Army chief outlined are 814 artillery guns, 8000 third generation antitank missiles (from Israel), acquiring 197 helicopters for the Army, upgrading of tanks and BMP armoured vehicles, procurement of assault rifles, bullet proof jackets and helmets for the infantry soldiers and night vision devices for the infantry mechanised forces.

Out of these two projects, 814 artillery guns at a cost of Rs 15,750 crore and more than 8,000 third generation anti-tank missiles (from Israel) at a cost of Rs 3,700 crore were approved by the Defence Acquisition Council (DAC) headed by Defence Minister Manohar Parrikar, however, other five crucial projects are still under consideration of the Ministry of Defence (MoD). Both would have to be cleared by the Cabinet Committee on Security (CCS) before the procurement process starts because any project with more than Rs 1,000 crore budget needs CCS approval.

Since 2009-10, the Army’s capital budget is on a continuous decline hitting the lowest point in 2013-14 when the capital budget was only 18 per cent of the total allocation. This was spent mostly on the “committed liabilities” or existing purchases.

For 2014-15, the Army’s additional demand (for grants) was not met but capital budget, meant for acquisition was reduced by about Rs 5,000 crore as the money was transferred to revenue heads used for paying salary, pension and fuel bill, said a source. Other two services are also likely to have suffered from the budget cut and the modernization is likely to be delayed further, which will have adverse effect for the defence forces as well as for the national security.

Defence expenditure, which was 2.24% of GDP in 1997-98, has come down to 1.79 per cent of GDP in 2014-15 and this gradual decline is against the modernization of defence forces.

One of the reasons behind enhancement of revenue budget is the NDA government’s plan to implement one-rank-one-pension (OROP) plan for ex-servicemen which is pending for the last three decades. The government accepted the OROP in principle and modalities of implementation are being worked out. Last month, Parrikar said OROP, which was announced in the last budget, would be implemented before the next budget.

India cleared a bulk of defense projects worth $13 billion in a bid to boost the country’s national defence preparedness, the Indian DAC said on 25 October 2014. The council decided that six submarines will be made indigenously at a cost of about 50,000 crore rupees. It also decided to purchase 8,356 Israeli anti-tank guided missiles at a cost of 3,200 crore rupees for Indian Army. The council finalised purchase of 12 upgraded Dornier surveillance aircraft with improved sensors from Hindustan Aeronautics Limited at a cost of 1,850 crore rupees. The DAC also decided to buy 362 infantry mechanised vehicles at a cost of 662 crore rupees. The decision to manufacture the submarines in the country is in line with Prime Minister Narendra Modi’s Make in India pitch.

The Indian defence budget stood at US $11.8 billion in 2001. On February 17, 2014 Indian Finance Minister P. Chidambaram announced a 10% increase in India’s defence budget, taking it to $36.3 billion. In March 2014 China announced a 12.2 percent increase in its defense budget, raising military spending to $132 billion.

India announced plans to boost defence spending in 2014-15 by 12 percent over the previous year, and further opened the domestic weapons industry to foreign investment. The Modi government had long called for a militarily strong India to counter potential threats from both China and Pakistan. In July 2014 the new Indian military budget was set at 2.29 trillion Indian rupees ($38.35 billion) for 2014-15, and the foreign investment limit in the domestic defense industry was raised from 26 percent to 49 percent.

India cleared a bulk of defense projects worth $13 billion in a bid to boost the country’s national defence preparedness…

Arun Jaitley, who was both the Defence Minister and the Finance Minister in the new BJP government, presented the budget for the year 2014-15 on July 10, 2014. He stated, “There can be no compromise with the defence of our country. I therefore propose to allocate an amount of 2,29,000 crore for the current financial year for Defence. … Modernization of the armed forces is critical to enable them to play their role effectively in the Defence of India’s strategic interests. I, therefore, propose to increase the capital outlay for Defence by 5,000 crore over the amount provided for in the interim Budget. This includes a sum of 1,000 crore for accelerating the development of the Railway system in the border areas. Urgent steps would also be taken to streamline the procurement process to make it speedy and more efficient.”

Defence expenditure, which was 2.24% of GDP in 1997-98, has come down to 1.79 per cent of GDP in 2014-15 and this gradual decline is against the modernization of defence forces. Hopefully, the next budget will be around 3 per cent of the GDP keeping in view the long pending demand of defence modernization and threat perception from the adversaries China and Pakistan.

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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Col (Dr) PK Vasudeva

is author of World Trade Organisation: Implications for Indian Economy, Pearson Education and also a former Professor International Trade.

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3 thoughts on “Army Modernisation Plan Adversely Hit as Budget Cut by Rs. 5,000 crore

  1. India has cut down the spending on the forces by 8.5 this is the time when the economy is going up toward 8.6 % so… what the hell is the Modi government the BJP doing with this money. I think they have opened up many bank accounts in Switzerland; MODI is doing what he is good at that is lying to the people of INDIA

  2. If India cancels the French Rafale $30 Billion deal there will enough money for army. and in addition India could have funding for 200 Sukhois and funding to work on next generation nuclear submarines, futuristic aircraft & engines. India and create millions of jobs and opportunities for Indians in India.

  3. This happens in India. Our Army demanding Artillery since many decades but we now hope this govt will fulfill as previous govt was dull.

    We contributing hardly 2% of GDP as defence budget against china 7% and Pakistan 3% and more.

    Previous govt was busy in black listing foreign vendors, becoz of scam. When some defence deals is in Natl Interest then it must get execute immediately. We have major setback in Artillery, Submarines etc.

    Less said the better … pray the Gods look after our national security …. may bring down the cost even further…!!!

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