Military & Aerospace

Budgeting for Defence
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Issue Net Edition | Date : 27 Oct , 2016

Defence Budget for FY 2017-2018 will be announced in few months from now. The usual pattern will likely be followed: the three Services will work out their wish lists; HQ IDs will put the lists together, undertake examination as possible and send it to MoD perhaps with some extra emphasis to the Service that the CISC is from; MoD will do their own best and forward it to the Ministry of Finance (MoF), and; MoF will simply say the pre-determined figure – this much and no more. Mind you all this will happen in absence of a cohesive national security strategy (NSS) and comprehensive defence review (CDR).

Defence Budget 2016-2017 amounted to a ‘negative budget’ over the previous year, merely cut-pasting the previous year’s allocation.

The Finance Minister’s speech in Parliament for Union Budget 2016-2017 on February 29, 2016 placed on the net contained less than 12 lines on defence that read, “Defence of every square inch of our mother land comes before anything else. So far, we have been over dependent on imports, with its attendant unwelcome spin-offs. Our Government has already permitted FDI in defence so that the Indian-controlled entities also become manufacturers of defence equipments, not only for us, but for export. We are thus pursuing the Make in India policy to achieve greater self-sufficiency in the area of defence equipment, including aircraft. Members of this august House would have noted that we have been both transparent and quick in making defence equipment related purchase decisions, thus keeping our defence forces ready for any eventuality. This year too, I have provided adequately for the needs of the armed forces. As against likely expenditure of this year of 2,22,370 crore the budget allocation for 2015-16 is 2,46,727 crore.”

Whether the inter-dependence between defence and economy-cum-development were considered at all by the FM were unclear but he made no mention of mounting threats to national security.

Above was perhaps the first time that defence budget allocation in two successive FY were exactly the same – both in FY 2015-2016 and 2016-2017 the allocation stands at Rs 2,46,727 crore. Defence Budget 2015-2016 allocation of Rs 2,46,727 crore amounted to about US$ 40 billion but the same allotment in current FY was in the backdrop of the rupee having depreciated considerably over the previous year. This plus taking into account the yearly inflation rates in defence procurement, defence allocation for FY 2016-2017 was far less despite efforts to portray more than adequate by saying that “against likely expenditure of FY 2016-2017 2,22,370 crore the budget allocation was 2,46,727 crore”; implying that Rs 24,357 crores was the extra cushion – which it was not because of reasons mentioned.

At one time, France too was a developing country like India but then President Charles de Gaulle took a conscious decision in consistently boosting the defence budget for almost a decade, making France a powerful nation that no enemy dare attack.

The figure of Rs 2,22,370 as likely expenditure too needed to be taken with a pinch of salt; since October 2015, the military had been negotiating with the defence and finance ministries to finalize financial allocations for the coming financial year, 2016-17, projecting figures taking into account the inflation but as reported the Finance Ministry had slashed down these requests.

Development being the right flavor, defence allocation of more than 2.5% of the GDP would appear unrealistic but what is significant to note here is that while the defence allocation in FY 2015-2016 stood at only 1.7% of GDP, the FY 2016-2017 allocation has gone below even that in actual terms; not having taken into account the inflation while talking of looking towards betterment of economy and better GDP. To this end, Defence Budget 2016-2017 amounted to a ‘negative budget’ over the previous year, merely cut-pasting the previous year’s allocation. Announcements by successive governments like “as much funds needed by military will be made available” are routine but mean little, especially with the mounting critical voids.

Sure the government must boost expenditure in fields like education, food, agriculture, healthcare, creation of jobs etc. At the same time can we ignore: the mounting China-Pakistan threat; foreign aided ‘third front’ within our borders in addition to other running insurgencies; poor equipping of our military over past decade with 50% equipment obsolete and 30% provisioned indigenously sub-standard; widening capability gap between the PLA and our military; defence assistance to Pakistan by the US and China; and, conflict having enlarged to the cyberspace, space and electromagnetic domains.

At one time, France too was a developing country like India but then President Charles de Gaulle took a conscious decision in consistently boosting the defence budget for almost a decade, making France a powerful nation that no enemy dare attack. Last year, President Hollande announced that France would increase its defence budget by close to Euros four billion over four years to cope with rising terrorist threat. India faces a terrorist threat far greater than France.

So where do we go from here as far as defence budgeting goes, especially when our MoD is crammed with bureaucrats and no military professionals with a former CISC thrown in recently as ‘advisor’ only.

Defence Budget for FY 2017-2018 will be announced in few months from now. The usual pattern will likely be followed: the three Services will work out their wish lists; HQ IDs will put the lists together, undertake examination as possible and send it to MoD perhaps with some extra emphasis to the Service that the CISC is from; MoD will do their own best and forward it to the Ministry of Finance (MoF), and; MoF will simply say the pre-determined figure – this much and no more. Mind you all this will happen in absence of a cohesive national security strategy (NSS) and comprehensive defence review (CDR).

The long-term-integrated perspective plan (LTIPP) is also worked out in absence of the NSS and CDR. The CDS who can contribute greatly in systemizing defence and synergize the Army, Navy and Air Force has not been appointed. This despite following the Kargil Review Committee Report, the Group of Ministers (GoP) headed by the then Deputy Prime Minister and Home Minister LK Advani had strongly recommended early establishment of CDS. The Service Chiefs have little say in strategic policy formulation and an adversary like China is handled by the know-all China Study Group who have never interacted with HQ Eastern, Northern or Central Commands.

So where do we go from here as far as defence budgeting goes, especially when our MoD is crammed with bureaucrats and no military professionals with a former CISC thrown in recently as ‘advisor’ only. Perhaps we could take a cue from the US – how the US Defence Budget is chalked out.

It would be prudent that army commander level officers of the three services make such pre-budget presentations to the Standing Committee on Defence in presence of the Service Chiefs and the CISC.

In the US, all Theatre Commanders and the SOCOM Commander make pre-budget presentations to the Senate Armed Forces Committee, bringing out: one, what is their present combat capability; two, what defence budgetary allocation they request, and; three, if allotted the requested budgetary allocation, what will their combat capability will be. It is a simple yet effective procedure that also apprises the Committee Members what the current capabilities of the US Military is, what the voids are, and what needs to built up at what priority.

In the present set up as ours, adopting such a procedure is necessary. Fortunately, we have a Standing Committee of Defence in the Parliament headed by a veteran two-star rank officer (not a film-star as in the previous government) who has proved his mettle as a Union Minister during NDA 1. It would be prudent that army commander level officers of the three services make such pre-budget presentations to the Standing Committee on Defence in presence of the Service Chiefs and the CISC. This Committee then should then forward its recommendations to the government; what the defence budget allocation for the ensuing year should be.

Additionally, the Parliament’s Standing Committee on Defence recommendation for a “non-lapsable and roll-on allocation” fund for 5-10 years for defence equipment must be followed through by the government. Besides, ‘Make in India’ is not the be all and end all of defence. It is about time the government restructures the higher defence organization including inducting military professionals in the MoD and appoints CDS to synergize the military, instead of a puppet permanent Chairman of COSC with no operational powers.

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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

Lt Gen Prakash Katoch

is a former Lt Gen Special Forces, Indian Army

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5 thoughts on “Budgeting for Defence

  1. I hv bn privileged 2 read some of the master piece articles of the scholar/ex- soldier Lt Gen Prakash Katoch, and hold his brilliance in high esteems. No point made out by the author in his article Defence Budget published in the Indian Defence Review , hinted below, can be disputed by any sane person. However I intend to highlight certain points which seem to hve escaped his attention. While the Military Forces are busy in defending the nation from external invaders in extremely tough circumstances the evil and antinational forces, represented by some politicians, journalists and the enemy spies inside the country are busy , in extremely comfortable positions and smooth circumstances , in puncturing the high morale of the Forces. Their rubbish and unquotable remarks about our Guards intend to throw cold water on their emotional attachment with the Mother Land, patriotism, initiative and war preparedness. They doubt even the Honble Director General of Military Operations when they demand proof of the Surgical Strike. Directly or indirectly, knowingly or unknowingly they help in breeding and spreading terrorism and antinational feelings within the borders. They too need check and setting right. For that the Police Forces of various brands, whether in uniform or civies , have to be looked after. They too need funds. Their job can no way be treated as less important than that of the Military Forces. The war prepared ness of the enemy agents, sleeping cells and modules, and the enemy-bought Indians in our society can no way be under played. It is an ongoing process, bound to continue till the time every citizen of India is truly Nationalised. The antinational forces deride patriotism by calling it as jingoism. There is a vast nursary of terrorism and enemy agents , which are as determined to harm the security, integrity, solidarity, sovereignty and peaceful coexistence in our multicolored society as are the Military Forces in defending and safeguarding them.

  2. THE DUSTY DARK CORRIDORS OF SOUTH BLOCK FIRST FLOOR ARE MOTH RIDDEN , DEFUNCT , ROTTEN WHERE PROFESSIONALISM OF SERVICES IS GIVEN A WIDE BERTH IN FAVOUR OF VOTE BANK POLITICS COLLECTION OF PARTY BRIBES , RENT SEEKING BY BABUS ON FILES DELAYING AND LEAKING OF INFORMATION FOR COMMERCIAL RIVAL FIRMS . INSTEAD OF ALL WEATHER BABUS UNDER GARB OF CIVILIAN CONTROL, BANKERS LAWYERS, CHARTERED ACCOUNTANTS, BUSINESS CEOS OF INTERNATIONAL DEFENCE FIRMS OF INDIAN ORIGIN ON CONTRACT ARE POSTED, INDIAN DEFENCE BUDGETING , AQUISITIONS WILL REMAIN AS THEY HAVE BEEN FOR LAST 65 YEARS . DELAYS , WASTE AND WRONG AQUISITIONS WILL CONTINUE TO BE THE BANE OF THE ARMED FORCES . THE ENTRENCHED BUREUCRACY , A WASTEFUL PARASITE AND MONKEY ON THE FORCES BACK MORE LETHEL AND DANGEROUS THAN THE PAK ARMY AND ISI WHOM THE FORCES CAN HANDLE BUT ARE IN AVICE LIKE GRIP OF THE BABUS WHO HAVE DENUDED THE NATIONS DEFENCES WITHOUT ACCOUNTABILTY AND RESPONSIBILTY
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  3. A very well researched and incisive article by General Prakash Katoch which should receive urgent attention of our Raksha Mantri. Looking at the growing belligerence of China there is an urgent need for upticking the percentage of GDP allocated for India’s defence. I would even go one step forward and suggest that in addition to fast paced modernization the size of Indian army should be increased to more than 20 lakh soldiers and officers – almost equal to the size of Chinese army. It cannot be done in one go, but a plan for incremental ANNUAL increase in the size of Indian army, Navy & Air Force should be drawn up and implemented. The objective should be to have a large modern army matching the combat efficiency of Chinese army. By augmenting the size of Indian army the employment opportunities will also increase.

    Ram Ohri

  4. There can’t be two opinions that defence is one of the most significant areas for resource allocatiin in the nation’s larger interest. However the extent of allocation has to be viewed in the context of the over all availability of resources and the variius sectors other than defence that too need to be catered for.
    Arguing for allocatiin of funds in terms of certain percentage of GDP has been debated at length within the MoD with due participation of experts from the three services, defence accounts department, MoD and MoFin and hasn’t been found to be practical oe even feasible. A more realistic idea that found favour with all concerned some 20 years back was ‘zero budgeting’, crux of the system is that instead of allocating funds based on some kind of averaging of previous years’ allocation and asking the users to make do within the same allocatiin is made based on realistic ascertainment of likely capacity to spend during the year ahead and a meticulous system of periodic appraisals and reviews in between so as to make changes both in allocations as well as expandibility.
    Mrs Sumi Tandan a defence accounts service officer who later became Addl Secretary in MoD had done massive work on zero budgeting in the late 1990s. Iam not aware why it was given up even without a trial. MoD should consider to revive it.

  5. I feel very ashamed why Indian media says “ISI, Pakistani backed terrorists attacked India, please understand and only say that attackers are Pakistan nationals and who are trained by Pakistani military they are Pakistani soldiers equally, attacks like Bombai, Pathankot and uri may be considered attack on indian states ,India now India reserves the right to hit back Pakistan”

    In 1971 we disintegrated Pakistan and now Pakistan half is challenging India, India must use Baluchistan freedom fighters like bangali mukti bani , only chopping Pakistan is the ultimate treatment of Indian chronic disease otherwise India will keep on suffering at LOC and Pakistani terror. India is 4 time double from Pakistan in military power. Pakistan internal war and pro-Indian Afghanistan gives an immense favor to India.

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