Military & Aerospace

Defence Budget 2018-19 Dashes Hopes For Modernisation
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Issue Net Edition | Date : 05 Feb , 2018

While the government has increased the defence budget by 5.91 per cent for FY 2018-19 to Rs 2,95,511.41 crore, the allocation is estimated at around 1.58 per cent of the GDP — the lowest since 1962 once again dashing the hopes for any major jump in military modernisation despite heightened tensions confronting Pakistan and China along the unsettled borders. An additional amount of Rs 1,08,853.30 crore has been provided for defence pensions. The defence budget, which will account for 12.10 per cent of the total government expenditure, is 7.81 per cent more than the Rs.2,74,114.12 crore announced in the last budget for FY 2017-18 — the figure was later revised to Rs.2,79,003.85 crore.

Moreover, the defence budget includes a capital outlay of just Rs 99,563.86 crore for new weapon systems and modernisation, which is dwarfed by the revenue expenditure (day-to-day running costs, salaries etc.) of Rs 1,95,947.55 crore and expenditure on pensions.

The annual defence budgets have shown a discernible trend of declining modernisation outlays for new projects, with almost 80 per cent of the outlays earmarked for “committed liabilities” (installments for arms deals inked in earlier years) and skewed revenue to capital expenditure ratio. This has meant that the Army, Navy and Air Force continue to grapple with critical operational gaps on several fronts ranging from small arms, guns, howitzers, fighters,and submarines to helicopters and also other defence equipment.

On his part, finance minister Arun Jaitley declared the government was focusing on developing connectivity infrastructure in border areas to secure the country’s defences. “Rohtang tunnel has been completed to provide all weather connectivity to the Ladakh region. Contract for construction of Zozila Pass tunnel of more than 14 kilometer is progressing well. I now propose to take up construction of tunnel under Sela Pass (in Arunachal Pradesh),” he said.

“Our armed forces have played a stellar role in meeting the challenges we have been facing on our borders as well as in managing the internal security environment both in Jammu and Kashmir and the North East. I would like to place on record our appreciation for the efforts and the sacrifices made by the three services in defending the interests of the nation,” he added.

The armed forces, incidentally, had sought an allocation of Rs 26.84 lakh crore+ ($416 billion) over the next five years to ensure requisite military modernisation and maintenance.

As per the 13th Defence Plan, Rs 12,88,654 crore has been projected for the capital outlay, while Rs 13,95,271 crore for revenue expenditure. With an eye firmly on China, there is also a separate section in the plan on the “capability development” of the strategically-located tri-Service Andaman and Nicobar Command, which was set up in October 2001 but has suffered from relative neglect, lack of infrastructure and turf wars due to shortage of funds.

The defence five-year plans are formulated in consonance with existing threat perceptions, the “RakshaMantri’s operational directives” and the 15-year long-term integrated perspective plan (LTIPP). But they have not received much attention from successive governments, with the 10th (2002-07), 11th (2007-12) and 12th (2012-17) Plans failing to get approval from the finance ministry.

Govt will develop two defence industrial production corridors and bring out an industry-friendly military production policy to promote defence manufacturing in India.Jaitley said the government would also bring out an industry-friendly “defence production policy 2018” to promote domestic production by the public sector, private sector and MSMEs. He said a number of initiatives had been taken to develop and nurture India’s intrinsic defence production capability to make the nation self-reliant on its defence needs. The minister said private investment in defence production had been opened up, including liberalising foreign direct investment.

Defence Budget is utilised to meet revenue expenditure and capital expenditure. India is a growing superpower, which is surrounded by archrivals Pakistan in the west and China in the north. In addition to this, India has to fight terrorism and insurgency in Jammu & Kashmir and Northeast, so defence Budget must fulfill all the needs of our defence forces.

“The allocation is not at all adequate for modernisation of our armed forces. The expectation was much more,” said Dr.LaxmanBeheraresearch fellow of Institute of Defence Studies and Analysis (IDSA). The defence outlay is not based on the threat perception from a twin pronged offensive from China and Pakistan for which the country has to be prepared.

The report by the Comptroller and Auditor-General (CAG) which says there is a serious shortage of ammunition in the Indian Army has caused deep concerns and raised questions about the preparedness of the armed forces to fight a war. An earlier CAG report had mentioned the poor state of ammunition management in the army for the period 2008-13. The latest report is a follow-up audit and it has not found any significant improvement in the availability and quality of ammunition supplied by the Ordnance Factory Board (OFB) to the forces.

The Infantry, which is the ‘queen of battle’, has acute shortage of small arms like assault rifles, sniper rifles, stenguns, light machine guns and anti-tank guided missiles. In small arms, Indian Small Arms System Rifles (INSAS) need to be replaced with modern assault rifles. Currently army is using AK – 47’s and INSAS. The personal kit of an Indian soldier, which includes bulletproof jackets, helmets and shoes, needs to be replaced with lighter kit.

The Army has once again sounded the alarm about its critical operational deficiency in the field of anti-tank guided missiles (ATGMs), asking the government for the emergency induction of at least some of these “tank killers” till the indigenous man-portable systems being developed by the Defence Research and Development Organisation (DRDO) become a reality.
The Army, after all, has an alarming shortage of around 68,000 ATGMs and 850 launchers of different types, which are crucial for the infantry to halt advancing enemy tanks in the plains as well as guard the “active” line of control with Pakistan.

Defence analyst Mandeep Singh Bajwa said, “The army doesn’t have modern assault rifles, steel helmets, bullet proof jackets and night vision/night firing equipment. In addition to this, we also need to strengthen our Mountain Strike Corps. The Indian army relies mostly on Russian built T-72 and T-90 tanks. The army needs indigenous built tanks to fulfill the gap. Indigenously built Arjun Mark II is still in trial phase, though this main battle tank has much more superior firepower as compared to Russian tanks. We need artillery guns as our main artillery gun as Bofors has become outdated.”

As far as the Air Force is concerned, the picture is not too bright either. There is a major shortage of fighter jets. Currently we have 33 squadrons of fighter jets, whereas IAF is authorised 42 fighter squadrons.This figure will reduce further as MIG fighter jets will be decommissioned soon.

The government had signed a deal to procure 126 French fighter jets, Rafale, 36 of these fighter jets will be delivered by 2019 in the ‘ready to fly’ and rest 90 of them will be manufactured in India by Hindustan Aeronautical Ltd. The induction of indigenous built Tejas will also narrow the gap, but this aircraft needs improvement to match the requirements of IAF.IAF is also thinking of buying American fighter jets F-16 or Sweden’s Gripen to increase its strength.

There is a tremendous shortage in the allocation of capital expenditure to the Air Force. Even if we induct more aircrafts, we don’t have proper infrastructure to keep them. According to defence analysts, “Runway resurfacing needs to be done, aircraft hangers needs to be build, which requires a lot of funds. The work is getting stalled due to the lack of funds. Minimum RS 700-800 crore is needed to build proper infrastructure. We have bigger carry over liability in year 2018-2019, so the works are going to be stalled.”

The picture is equally gloomy in the Indian navy. There is a shortage of submarines. We have currently 14 submarines in operation; half of them have completed their 75 percent of the service. INS Kalvari has been commissioned into the navy under project-75 and five more submarines will be inducted under the same projection the coming years.We need to have at least 24 submarines. Currently we have only one aircraft carrier along the western coast, but we need another aircraft carrier along the eastern coast. If we want our navy to be a ‘Blue water Navy’, attention needs to be paid on the modernisation of the navy.

Construction of 12 mine countermeasures vessels are also pending at Goa Shipyard Limited (GSL). There is delay in importing 16 medium multirole helicopters of 12 tonne each. Our navy requires a replacement of obsolete cheetah helicopters.

These are some of the major requirement by the three wings of our defence forces. These deficiencies must be fulfilled at the war footing and the priority must be given for the modernisation of our defence forces lest we are caught with our pants down like 1962.

More worryingly, the allocations made for maintenance of equipment currently in use is also inadequate. Similarly, allocation towards war wastage stock including ammunition stock is largely the same as last year. In addition to focus on “Make in India” in defence, it is expected that indigenous design and development be undertaken by Indian industry for producing important components. Since its introduction, no development project has been signed. It has been allocated a paltry Rs. 44.63 crore in assistance. This year’s budget is also silent on policy issues like the strategic partnership scheme and defence technology fund.

The Defence Budget cuts have affected modernisation of the armed forces.
However, before the Ministry of Defence can ask for more funds, it needs to address the issue of underutilisation of the capital budget.Talking on the issue of underutilisation of the capital expenditure, there is an issue in terms of modernisation expense. This expense is not fully consumed year after year. Almost Rs 6000 crore was surrendered in the financial year 2016-17. As per the estimates, approximately Rs.7000 crore worth of the capital budget has been surrendered from the 2017-18 capital expenditure. This year we are focusing on full utilisation of the modernisation expenses.  In this case, fingers are pointed towards the finance ministry as underutilisation of the capital budget is due to finance ministry’s machinations, which prevent big contracts from getting approved.

The defence outlay has been receding every year but for 2018-19 it has been the lowest 1.58 per cent of the GDP since 1962, which is of grave concern for the armed forces.The standing committee of Defence and Analysts had recommended that the defence outlay for its modernisation should be 2.5 – 3 per cent of the GDP and says that this outlay is under-allocation, which has serious implications for battle worthiness of the forces.

In contrast to other democracies India spends the least on defence and national security, which needs a serious strategic analysis at the highest level.

President Trump has announced plans to increase the US defense budget in 2018 by $54 billion dollars in order to “rebuild the depleted military of the United States of America at a time we most need it”. According to the Stockholm International Peace Research Institute, in 2015 US defense spending outstripped that of China, Russia, UK, France, Japan, Saudi Arabia and India combined. India needs a strong army if it wants to face its adversaries with strength and dignity.

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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) P K Vasudeva

Col (Dr) P K Vasudeva is a defence analyst and commentator.

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One thought on “Defence Budget 2018-19 Dashes Hopes For Modernisation

  1. Is the war starting tomorrow, if not then what are you complaining about.

    Force level at about current level with inflation and personnel expense adjustment at 8% is sufficient.

    India is much more aggressive in defence spending compared to $15 billion Pakistan spends or lot less Chinese spend in Tibet or Western China. 80% of Chinese defence preparedness is facing Japan, US, Taiwan, Korea, Vietnam and much of the South China Sea which they have grabbed.

    Just a piece of additional information and advice to you: – in the last fiscal year, Army could not spend close to 3/4 of a billion dollar. It lapsed at the end of the financial year. That has been happening for years. What makes you think that Army, Airforce and Navy will suddenly become more efficient and spend all the monies allocated.

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