Mohan Bhagwat is right. And the defence budget indicates why the army is not ready for war!

By Ajai Shukla

Business Standard, 13th Feb 18

Mohan Bhagwat, the chief of the Rashtriya Swayamsevak Sangh (RSS), was on the button when he declared on Sunday that, if war broke out, the military would not be ready for at least six to seven months. The RSS chief did not mention that those months would fly past in emergency procurement of weaponry for the army, probably at usurious prices. And he was laughably naïve in boasting that the RSS could fill the gap while the army prepared for operations. Yet, Mr Bhagwat perceived the worrying lack of defence readiness, even though it apparently escapes those whose primary responsibility is the defence of the country — Prime Minister Narendra Modi, his defence minister, Nirmala Sitharaman, and her predecessors, Arun Jaitley and Manohar Parrikar. The situation was no different under the previous government.

That the military is unprepared for war is no secret. Beyond the political bluster, threats from generals and warmongering from television warriors, this is evident from plenty of thoughtful commentary, and from a conveniently leaked letter written in 2012 by former army chief, General V K Singh, to his defence minister, A K Antony, listing equipment shortfalls. There is also a less advertised shortfall in training and alertness that has gifted adversaries with operational successes like in the terrorist strikes in Pathankot and Uri, and in Jammu over the weekend. An editorial in this newspaper noted that the government’s miserly defence allocations are not in sync with its tough posture and with a deteriorating security environment. It concluded that Mr Modi probably does not expect a war. 

What are the messages from last fortnight’s defence budget? Seen alongside the last few Budgets, it highlights an unimaginative incrementalism, with each year seeing broadly the same percentage of funds distributed between services and departments, with the absolute allocation gradually rising in tandem with the 6-10 per cent annual rise in the overall budget. In each of the last three years, the army has been allocated 68-69 per cent of the services’ budget, with the navy getting about 12.5 per cent and the air force 19.5 per cent. In the years before that, i.e. 2014-15 and 2015-16, the army got only 64-65 per cent, with the navy and air force getting an additional 2 per cent each. But the grant of One Rank One Pension (OROP) in 2015 and the implementation from 2016 of the Seventh Pay Commission’s salary recommendations disproportionally raised the manpower-heavy army’s requirement for money, at the cost of the navy and air force. The noteworthy point here is that even this unusual shift in allocations was occasioned not by strategic imperatives, but by a perceived political need to raise military pensions and salaries.

 Also evident is the government’s unwillingness to tackle the personnel problem head-on, even though manpower costs are now close to 70 per cent of the military’s total allocation. This  is evident from the exclusion of military pension costs from the declared budget, even though the pension bill is a direct outcome of personnel policies followed by the three services. Excluding pension costs from the defence budget, even though they have almost doubled under the present government from ~605 billion in 2014-15 to ~1,089 billion this year, creates little incentive for the painful shift to a predominantly short-service military where most soldiers serve for five-seven years and then move on without being entitled to a lifetime pension. This government has added simplicity and transparency to the defence budget and factoring pension costs  would be another practical and beneficial reform. My chart incorporates pension costs.

In countries that are serious about defence, each service is allocated funds based on perceived security priorities, operational roles in dealing with those threats, and the equipment, training, and manpower needed to discharge roles. However, the unchanging percentages in the service allocations bear no reflections of the security debates and environment changes of recent decades. There is no funding for the changed approach to warfighting in a nuclearised backdrop that has birthed the Cold Start doctrine — lightning strikes by forward deployed armoured formations to respond to serious provocation by Pakistan. Nor is there any budgetary recognition of the pressing need for additional Special Forces, or aerial strike capabilities as viable retaliatory options — think surgical strikes. The repeated public affirmations about India taking on the role of “net security provider” in the Indian Ocean, or building up coastal security mechanisms along a highly vulnerable 7,500 kilometre coastline, is not validated by any increased outlay in the navy budget, which has in fact shrunk by two per cent in overall terms; and from over 30 per cent of the defence capital budget in 2014-15 to just 25 per cent today. With smaller maritime adversaries like Pakistan increasingly relying on countering India’s more powerful navy through “sea denial”, which means laying mines and prioritising submarine warfare, the naval allocations remain grossly insufficient for India’s planned response — to buy 12 mine counter measure vessels and 16 anti-submarine warfare shallow water craft, torpedoes and sonars for a range of vessels, and build six new submarines in India. Instead, procurement bottlenecks have forced the navy to surrender billions in unspent money: ~25 billion in 2012-13; ~36 billion in 2013-14; ~53 billion in 2015-16; and ~44 billion in 2016-17.

Similarly, an already depleted air force, which must urgently conclude a “single engine fighter” contract to replace ten retiring MiG squadrons with fighters that are built in India, has been allocated a capital budget that would barely cover “committed liabilities”, the phrase for installments on purchases in earlier years, like the Rafale fighter.

Another major dichotomy is the pittance allocated for “Make” projects, which senior defence ministry officials talk up as locomotives for India’s defence industry. “Make” projects involve consortia of Indian defence firms coming together to build complex defence platforms with the defence ministry reimbursing 80-90 per cent of the development cost. Yet, despite its obvious industrial and technological benefits, the government spent nothing under this head in 2015-16; ~2.5 billion in 2016-17; ~ 0.2 billion last year; and has allocated ~1.4 billion this year, a mere drop from the capital budget ocean of ~940 billion.

The government must ensure that defence spending — which will account for 16.5 per cent of government spending and 2.16 per cent of the gross national product in 2018-19, inclusive of pensions — buys bang for this very considerable buck. This will require thoughtless incrementalism to give way to holistic planning and a steady hand at the tiller. With three changes of defence minister in four years, the Modi-government’s entire term will have passed in ministerial learning. The defence ministry cannot afford this game of Musical Ministers.

Budget distribution between the three services

	Total service budget^^		Each service’s share of
			Personnel costs^^		Running costs		Capital budget**
	Rs crore	%	Rs crore	%	Rs crore	%	Rs crore	%
2014-15 (Actual)
Army*	166,539	64%	115,987	84%	32,216	65.5%	18,336	25%
Navy^	38,235	14.5%	8,075	6.0%	7,891	16%	22,269	30.5%
Air Force	56,304	21.5%	14,299	10%	9,209	18.5%	32,796	44.5%
TOTAL	261,078	100	138361	100%	49316	100%	73,401	100%
2015-16 (Actual)
Army*	174,893	65%	119,468	83.5%	34,823	65%	20,602	29.0%
Navy^	37,178	14%	8,501	6.0%	8,802	16.5%	19,875	27.5%
Air Force	55,993	21%	15,061	10.5%	9,734	18.5%	31,198	43.5%
TOTAL	268,064	100%	143,030	100%	53,359	100%	71,676	100%
2016-17 (Actual)
Army*	220,712	69%	154,894	83.5%	37,587	65%	28,231	36%
Navy^	40,709	12.5%	10,736	6.0%	9,976	17.5%	19,997	25.5%
Air Force	59,823	18.5%	19,442	10.5%	9,995	17.5%	30,386	38.5%
TOTAL	321,244	100%	185,072	100%	57,558	100%	78,614	100%
2017-18 (RE)
Army *	231,368	68%	168,607	82.5%	37,555	64%	25,206	32%
Navy^	42,398	12.5%	12,560	6.0%	10,490	18%	19,348	25%
Air Force	67,836	19.5%	23,700	11.5%	10,580	18%	33,556	43%
TOTAL	341,602	100%	204,867	100%	58,625	100%	78,110	100%
2018-19 (BE)
Army *	250,714	68%	185,232	82.5%	38,794	64%	26,688	32%
Navy^	45,255	12.5%	13,470	6.0%	10,937	18%	20,848	25%
Air Force	72,609	19.5%	25,785	11.5%	11,068	18%	35,756	43%
TOTAL	368,578	100%	224,487	100%	60,799	100%	83,292	100%

(Source: Ministry of Finance budget document)

*    Excludes budget for Border Roads Organisation, but includes Rashtriya Rifles and National Cadet Corps

^    Excludes Coast Guard, but includes Joint Staff budgets

^^  Includes pensions to all three services

**  Capital budget for three services only, excludes allocations for DRDO and Ordnance Factories