India’s defence Budget in a 10 trillion economy

New Delhi | Updated: February 5, 2019 1:19:52 PM

Budget 2019 India: The Indian Army Land Warfare doctrine released in 2018 clearly highlights a strategy for a two-front war and the Indian Air Force war game Gagan Shakti in April 2018 simulated a two-front war scenario.

budget 2019Defence budget 2019: The average defence expenditure as a percentage of government expenditure was well above 30 per cent.

By Col Mohinder Pal Singh

Budget 2019: One of the first reports submitted to the Government of India on defence expenditure was the Blackett report in 1948. It was prepared by the Nobel Prize winning physicist Patrick Blackett who was invited by the then government as he was closely associated with the political and military fraternity through World War II and the subsequent nuclear decade. In his report to the Indian Government, he recommended that the defence spending of India should be capped at two per cent of the GDP.

In line with his recommendation Indian military spending remained considerably low, hovering between 15-18% of government expenditure and the defence spending had averaged 1.59 per cent of GDP between the years 1947 and 1962 as the overall strength of the armed forces was very small when compared to today. However, after the 1962 debacle, the government gave the Indian military some institutional autonomy to make decisions and enhanced military readiness. This led to a surge in defence expenditure from 1964 to the mid 1970s.

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The average defence expenditure as a percentage of government expenditure was well above 30 per cent. However, since the mid-1970s defence expenditure has continued to fall leading to a severe shortages in critical military equipment which serves to threaten our national security. From 1992-1993 when defence expenditure was around 2.27 per cent of GDP it has fallen to 1.56 per cent of GDP (excluding pensions) in 2017 to 1.5 per cent in 2019-20.

Current situation

In March last year, in rather candid submission the Vice Chief of Army Staff told the Parliamentary Standing Committee of Defence that 70 per cent of the army’s equipment is vintage and it had ammunition reserves for ten days of war fighting. The Indian Air Force’s fighter aircraft strength which started with 20 squadrons in 1947 as per the Blackett recommendation, was clearly based on the single adversary threat, and a standing army strength of two lakh soldiers. Today the army itself is 1.2 million and the authorised requirement of fighter jets in Airforce is of 42 .

Unfortunately, today as we stand at a much larger threat of a two front war but a depleting strength at 30 squadrons which too are reducing at a fast pace. In the first week of January 2019 there have been one Jaguar and two Mirage mishaps. At this stage even with addition of two squadrons of Rafale in the next two years may still keep the squadrons at may be 30 alone. While India’s defence spending is still quite high in global terms and world’s fifth largest defence budget, most of its budget goes in paying for salaries and allowances of its currently manpower intensive military.

An analysis of defence budgets show that over the past ten years the revenue expenditure under the defence budget has been increasing and forms nearly two thirds of the defence budget. Capital expenditure, which is the money set aside for new procurements, however has been steadily falling for the past ten years and while a sum INR 86,000 crore had been allocated for the armed forces in FY18, the projected requirement for the armed forces is approximately 130,000 crore.

The current budget for the year 2019-20 presented in the parliament by Finance Minister Piyush Goyal on 01 Feb has been widely applauded for its very versatile policy initiatives displayed very little change in the defence outlays and was simply in line with historic trends. In the Rs 3.18 lakh crore figure, the capital outlay is just Rs 1,08,248 crore, representing a 6.8 per cent hike over the previous year’s budget. This is again close 1.5 per cent of the projected GDP for the year 2019-2020. The 30 per cent capital outlay is covering most committed liabilities and hence there is very limited funding for new projects, if at all any.

Impact on Defence Preparedness

Military threats against India have been on the rise and the Indian military can be expected to play a huge role securing our land and maritime borders in the future. China’s rise and its behaviour in the South and East China seas have shown that it still pursues a revisionist agenda.

This is also demonstrated on the Doklam plateau where the Chinese have continued their road construction despite the disengagement that had taken place in August 2017 and as per the latest reports three big arports are coming up in Tibet close to Indian borders which are going to be duel use. Furthermore, there is also the contingency where the Indian Army may have to execute its Cold Start doctrine in case of another 26/11 style attack by Pakistani based terrorists on a high value target.

The Indian Army Land Warfare doctrine released in 2018 clearly highlights a strategy for a two front war and the Indian Air Force war game Gagan Shakti in April 2018 simulated a two front war scenario. The lack of an adequate capital outlay with a foresight and planning for procuring modern equipment will greatly impact the ability of the armed forces to undertake the kind of military operations it envisions for future.

With the retirement of the Mig-21s in the coming years the Indian Air Forces strength is expected to fall to 24 squadrons in the coming years. This is in sharp contrast to even the Pakistani Air Force which has been procuring the JF-17 Thunder fighter aircraft from China (with assembly line in PAC) is expected to have 25 squadrons.

Establishing air superiority, if the Indian Army decides to undertake a Cold-Start-style operation in response to a terror attack, will be an ever increasing challenge in the coming years. The Army itself will face a challenge in executing such an operation given the lack of self propelled howitzers and basic ammunition. China, with approximately 2300 fighter aircraft (to India’s 800), 6700 Main Battle Tanks (to India’s 3000) and hugely superior border infrastructure will be able to undertake operations at much higher tempo should hostilities escalate. A two front war if at all it occurs will be an difficult situation for India to handle.

With its withering submarine fleet and the lack of Multi Role Helicopters for anti-submarine warfare operations, the Indian Navy is also lacking critical equipment. China’s increasing submarine forays into the Indian Ocean , the making of the second aircraft career and Pakistan’s decision to take nuclear weapons to sea, are some of the growing maritime threats emanating from the Indian Ocean. Given the increasing role of submarines in the Indian Ocean it is more important than ever for the Indian government to support acquisitions that address these threats.

Laying Foundations for tomorrow

Defence expenditure is not only an indicator of defence preparedness but also about increasing the area of strategic influence and strategic outreach which is imperative to national security. As per the finance minister’s budget speech on Feb 1, India will be a $5 trillion economy in next 5 years and $10 trillion economy in next 8 years. In order to safeguard of economic interests its important to have long term military weapon platforms upgradations as well as new acquisitions well in place. India’s maritime and land border vulnerabilities are no less than China and being a responsible democracy in the world its essential that the defence preparedness is maintained at the highest level.

One area of defence which require a long term planning is the R&D and indigenisation. Going by SIPRI data on the defence spending in 1989 for both India and China were almost equal ie about $12 billion , however in thirty years China’s defence spendings have grown to three times that of India. The envisaged 10 trillon dollar Indian economy after eight years will require an equally strong and updated military equipment and a modern armed forces to safe guard its national interests.

For achieving the same planning and budget allocation has to be done today. If a cue from China can be taken a $10 trillion economy is spending a whopping 2% of GDP (approx $175 billion in 2018)on defence and this does not include the huge spending on CPEC and CMEC which has strong strategic implications in the region. As the budget presented was in interim one , it is hoped that the main budget which is brought after the elections will have higher defence allocations with a focus on important upgradations and defence purchases which are crucial for our national security.

Having almost dismantled the ‘string of pearls’ its time that India is able to nip in the bud any new dragon’s design in our neighbourhood. This is possible if we lay the foundation of armed forces of a country of ten trillion economy today.

(Col Mohinder Pal Singh, PhD is an Army Veteran and Director at EGROW Foundation. Views expressed in the article are personal. Research assistance provided by Nishant Rajeev is acknowledged.)

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