The NDA government on assuming office and the defence minister on being appointed have repeatedly expressed the desire to curtail defence expenditure. The perception being that major savings can be effected by cutting out ‘non operational’ assets and structures. Towards this end the recently appointed 11 member committee has been charged ‘to ensure India’s combat capabilities and potential are enhanced, with a better teeth-to-tail combat ratio, within budgetary constraints.’ The objective being to ‘re-balance the overall defence expenditure in view of the escalating salary and pension bills’.
Our approach to national security has been political and diplomatic accommodation rather than military.
While addressing the top military commanders on board the aircraft carrier INS Vikramaditya, in Dec 2015, the PM wanted the military to be “agile, mobile and driven by technology”. As conveyed publically, it is to cut ‘flab’. While the objective is laudable and desirable, the limited approach of cutting out ‘non operational assets and structures’ may not produce any tangible results and may in fact impinge on the combat capabilities.
The conceptual construct in military force structuring and budgetary allocation is centred on two yardsticks: ‘Teeth to Tail Ratio’ and ‘Revenue to Capital Expenditure’. However, before these are applied for evaluating the effectiveness of military expenditure, the foundation of military force structuring and capability has to be defined by articulating what are the security concerns of the nation and how are they intended to be addressed.
National security is ultimately a question of evaluating security threats and national interests and deciding on capabilities to meet or secure them. Capabilities in turn mean expenditure. A nation has to decide what it is willing to spend on national security and safeguarding national interests just like an individual has to decide on personal insurance. The first must take the shape of a ‘Strategic Defence Review’ and define our responses in terms of military capabilities to be created and maintained. As this is a perspective over the long term, corresponding long term budgetary commitments have also to be stated. In other words what the nation is willing to commit and spend over the long term.
Stephen Cohen: – ‘India’s military modernisation has lacked political direction and has suffered from weak prospective planning, individual service centred doctrines and a disconnect between strategic objectives and the pursuit of new technology’.
In our context we are unique in never having formally articulated our security concerns and how we intend to address them. We are insecure in stating our security concerns. Our approach to national security has been political and diplomatic accommodation rather than military. Obviously, there is no long term financial commitment either. We are unique in arriving at our military spending on an annual basis. The budget speech by the finance minister this year did not have even a word on defence much less any debate in public or parliament as to what the country needs to or can afford to spend on defence even in the short term. The unilateral cut in the induction of Rafale fighters and putting on hold the raising of the mountain strike corps, both requirements arrived at after a decade of debate, are symptomatic of the absence of a deliberate long term security perspective and financial commitment.
Stephen Cohen, an authority on SE Asia and the Indian Armed Forces, sums it up in his book Arming Without Aiming – ‘India’s military modernisation has lacked political direction and has suffered from weak prospective planning, individual service centred doctrines and a disconnect between strategic objectives and the pursuit of new technology’.
Addressing the Combined Commanders Conference on board the aircraft carrier INS Vikramaditya, in Dec 2015, the Prime Minister spoke of ‘terrorism and ceasefire violations; reckless nuclear build up and threats; border transgressions; and, continuing military modernisation and expansion’ in the neighbourhood. He went on to state that ‘the shadow of West Asian instability is becoming longer, beyond that, our region is marked by uncertain political transitions, weak institutions and internal conflicts. And, major powers have also increased their engagement in our land and maritime neighbourhood.’ While the security concerned were well stated these need to be taken to their logical conclusion as to how we intend to address them.
Teeth to tail ratio is generally perceived to be the ratio of combatants to support personnel and an index of the effectiveness of the revenue expenditure. However, when defence expenditure is to be analysed with respect to the teeth to tail ratio, seldom if ever, is the vast manpower embedded in the defence support establishments like Defence Research and Development Organisation, Director General Defence Estates, Director General Quality Assurance, Ordnance Factory Board, Ordnance Factories, Defence Public Sector Undertakings and so on – all forming part of the defence expenditure – taken into account. Logically these are all support systems for the combat soldier, sailor and airman.
A major overhaul and restructuring is imperative if we are to get value for the money spent. Interestingly, defence civilians account for 40% of the defence pension budget.
Perennial shortages of boots, clothing, parachutes and ammunition and inordinate delays in weapon design and production are indicators of major shortcomings. The money spent on these organisations certainly does not give the required return in terms of defence capability. The investment in these entities and the ‘teeth’ provided by them merits much greater scrutiny then the support elements within the services. A major overhaul and restructuring is imperative if we are to get value for the money spent. Interestingly, defence civilians account for 40% of the defence pension budget.
In our context the Army is invariably seen as a manpower heavy organisation fit for cutting ‘flab’ and therefore defence expenditure, especially revenue expenditure. It is not well appreciated that the Army by the very nature of its role has to be a manpower intensive organisation. The Navy and Air Force on the other hand are equipment and technology intensive organisations operating from well established and compact bases with no commitment or employment in underdeveloped areas with extreme terrain and climatic conditions where supporting a combatant at the cutting edge may at times need more support troops than the combatant itself. Siachen is a pertinent example. The entire strength of the Indian Navy is perhaps less than some of the Corps of the Indian Army and the Air Force less than a Command of the Indian Army. In keeping with this perception the PM during his address on board INS Vikramaditya went on to say ‘… major powers are reducing their forces and rely more on technology, we are still constantly seeking to expand…’
Our security commitments are manpower intensive. Over 750 km of LC in J&K, LAC with China and IB with Myanmar (manned by Assam Rifles but backed by Regular Army) requires physical manning. Counter insurgency operations, mostly in underdeveloped areas, too are manpower driven. No technology or equipment can replace this commitment. Even where technology may substitute manpower, procuring such technology and more importantly maintaining such equipment is capital intensive. Being mostly imported, it is more often than not unserviceable for want of spares. Given the requirement of maintaining a young age profile of the Armed Forces, and consequent retirement of a large proportion between 35 to 45 years of age, one of the repeated recommendations which could affect substantial savings is inducting this manpower laterally into the Central Police Organisations like the BSF, CRPF, SSB etc. This would provide trained manpower thus saving on their training cost, defer the military pension commitment for 15 to 25 years and cut the overall pension commitment.
…With no systematic acquisitions and replacements for the next two decades, the balloon of equipment turning obsolete and requiring substantial capital expenditure stares us in the face today.
The perceived imbalance in the other area related to Revenue vs Capital expenditure is due to our overall allotment for defence declining in real terms over the years and corresponding expenditure on maintenance (pay, pension, fuel etc) progressively increasing. The ratio of revenue to capital expenditure thus appears disproportionate. In actual fact it is not that the revenue expenditure is high, it’s the capital expenditure which has been and is low compounded by surrender of thousands of crs of capital allotment every year.
The decade of the 1990s was practically without resources to carry out anything other than barely pay the services. Funds for even whitewashing the buildings were hard to come by. It could be said that there was all revenue expenditure and no capital expenditure! Under these circumstances the Army decided to arbitrarily cut down its manpower by 50000 with the objective of using the funds saved to enable capital expenditure. Accordingly a pro rata cut was imposed on all units and formations unrelated to their functional requirements. The Kargil Operation with the Army Chief stating ‘We will fight with what we have’ put an end to this ad hocism and restored the manpower.
The decade of the 1980s saw the highest defence expenditure as a percentage of GDP with major acquisitions of equipment and raising of field formations and units. With no systematic acquisitions and replacements for the next two decades, the balloon of equipment turning obsolete and requiring substantial capital expenditure stares us in the face today. Army Air Defence as a whole is practically obsolete and capital intensive to replace. Depleting fighter strength of the Air Force and submarines of the Navy are publically acknowledged. Inadequate and meagre budgetary allotments over the last two decades has resulted in shortages in ammunition and war like stores which are today pegged at approximately one lac cr rupees. These deficiencies leading to ‘hollowness’ in war wastage reserves in the armed forces are ‘Revenue’ expenditures adding to the perception of excessive demands for revenue expenditure. Even if such an amount is made available the deficiencies cannot be made up in a hurry.
The PMs vision will also require more than 1.7 percent of GDP that defence gets. It will also require a robust private defence sector, concerted research and development and the best human resources to provide the compatible military leadership. This will require political will to do so.
Faced with such requirements of expenditure caused due to haphazard and uneven budgetary allocations over the years, with no formal long term perspective and commitment, the most convenient and apparent source of curtailing expenditure is seen as manpower – in other words ‘flab’.
Our system of financial accounting also generates some distorted perceptions. Much of the in service equipment due for replacement and ammunition required for replenishment and reserves is classified under the revenue head whereas a simple understanding would place such expenditure as capital expenditure. Rationalising classification of expenditure heads and streamlining the budgetary and accounting process would perhaps give a truer picture of defence expenditure and its effectiveness.
This committee is not the first and certainly not the last to undertake this exercise of cutting structures and consequently expenditure. There has been no dearth of such studies in the past like the Krishna Rao Expert Committee, Sunderji Committee, Arun Singh Committee, Army 2020, Kargil Review Committee and Naresh Chandra Committee, not to mention the innumerable in house studies by the services. All have recommended major structural changes and refining budgetary approach to defence spending. Needless to say their implementation has been half hearted, if at all.
As stated by the PM ‘we have been slow to reform the structures of our armed forces… ‘ Undoubtedly, comprehensive restructuring of the military based on a long term perspective and financial commitment to include the higher defence management, integration of the services, logistics and manpower policies is long overdue. The PMs vision will also require more than 1.7 percent of GDP that defence gets. It will also require a robust private defence sector, concerted research and development and the best human resources to provide the compatible military leadership. This will require political will to do so. Incremental tinkering in unlikely to make it “agile, mobile and driven by technology”.