Union Budget 2021 Expectations for Defence: As speculation mounts and pre-budget predictions become the subject of discussion ahead of the Finance Minister’s budget presentation on 01 February, India’s financial planners are faced with the daunting challenge of addressing the multitude of expectations and imperatives that need attention.
By Commodore Anil Jai Singh,
Union Budget 2021-22 Expectations for Defence Sector: As speculation mounts and pre-budget predictions become the subject of discussion ahead of the Finance Minister’s budget presentation on 01 February, India’s financial planners are faced with the daunting challenge of addressing the multitude of expectations and imperatives that need attention. The country’s economy which had already been facing headwinds at the beginning of the year was further buffeted by the global pandemic which literally brought the world to a standstill and from which the global economy is still limping back to some semblance of normality. The unorganised sector in India literally collapsed, the manufacturing sector took a big hit and the GDP took a double digit hit. While tackling the economic fallout and the pandemic was difficult enough, the Chinese transgression across the Line of Actual Control served as a painful reminder of the omnipresent external security challenge facing the country. The Chinese reluctance to restore ‘status quo ante’ also made it increasingly obvious that this was not a one-off but part of China’s larger strategic design. However, more than anything else, it underlined the fact that instead of remaining in denial on the security threats the country faces which seems to be the government’s default reaction to any security crisis, it is time for the leadership to square up to reality and build the necessary national capability to secure our frontiers and our national interests wherever in the world these might be.
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The defence budget has been on a downward spiral in real terms through the six years of this government and has been hovering around 1.5 to 1.6 % of the national GDP which is the lowest since India’s defeat at China’s hands in 1962. Now, six decades later, with the same enemy literally at the gates across the ‘impregnable’ Himalayas and showing no inclination to return, it is time that the larger and longer term external security threat to the nation needs to be adequately addressed. History has a nasty habit of repeating itself if the right lessons are not learnt. The constant rhetoric that this is not the India of 1962 is okay to play to the galleries but should not blind us to the reality of the security challenges the country faces.
Over the last few years the armed forces have regularly flagged their concern at the inadequate budgetary allocation to meet their current commitments and future requirements. This inadequate allocation is further compounded by the suboptimal utilisation of this money due to an inefficient procurement system in which a poorly informed generalist bureaucracy with little or no knowledge of national security imperatives oversees an inefficient state run defence industrial complex with a research and development organisation that is woefully lagging in providing contemporary cutting edge technology to a military that will have to fight and win in a technology intensive battlespace. As a consequence, equipment has to be purchased from abroad at far higher cost. This not only places a further strain on these limited resources but also increases India’s strategic vulnerability. India has the ignominious distinction of being the largest importer of military hardware in the world year after year. The budgetary constraints combined with the systemic shortcomings is leading to capability gaps, both qualitative and quantitative with a snowballing effect on committed liabilities which is severely constraining the armed forces from investing in futuristic technologies.
Defence planning is a continuum shaped by numerous factors which includes national aspirations, the external environment, the internal imperatives, the industrial capacity and capability, the science and technology framework, the fiscal resources and many others. It is therefore essential that a nation must have a well-defined national security strategy that should be above narrow political considerations and should have a broad national consensus. Based on this long-term strategy, the requirements can be calibrated to reflect the dynamics of the evolving requirement and budgeted accordingly. In its 74th year as a robust independent democracy seeking to play a larger role on the global stage and aspiring to a permanent membership of the UN Security Council, India still does not have an officially articulated national security strategy that has been passed by Parliament. In fact, there has never even been a single White Paper on national security. This is indeed a glaring anomaly for a country that has fought four full-fledged wars and one limited conflict and is constantly being sniped at by two nuclear armed neighbours with a close nexus between them. However, that notwithstanding, the threat to our national security is in the here and now and needs to be adequately addressed.
This lack of strategic foresight becomes evident when, in the face of a threat, the Vice Chiefs of the three services are given emergency financial powers to tide over the crisis. This was done recently in the face of the current tension and has also been done earlier. In fact this is hardly a desirable situation. Military capability does not get built in a day. The induction of new equipment is a lengthy process which requires sustained support and budgetary commitment. Both of these have been consistently lacking.
The Ministry of Defence is in dire need of reform and the first step in that should be to integrate the service headquarters into the Ministry of Defence and not be hostage to its whims born out of ignorance. The creation of the office of the Chief of Defence Staff should have addressed this to some extent but clearly the status accorded to that office has stopped short of being meaningful in higher defence decision making. Perhaps the Chinese belligerence and clear intent to belittle India will finally make the political leadership appreciate the gravity of the situation.
The defence budget is divided into a capital head and a revenue head. While the revenue allocation is meant for the day-to-day running of the Armed Forces which includes deployment of men and equipment, maintenance and repair, medical services, operational logistic support including fuel and lubricants, ammunition, routine upgradation of equipment, salaries etc., the capital allocation is meant for modernisation and induction of new equipment. Not surprisingly, the million strong Army gets the lion’s share of the defence budget; its extensive deployment in some of the most arduous climatic conditions in some of the most inhospitable terrain in the world and operating in eyeball to eyeball contact with the enemy on two fronts leads to high revenue expenditure and leaves only a small percentage for capital acquisitions. The Air Force and the Navy follow in that order. Balancing the share of each requires a deep understanding of the national security imperatives in the long, medium and short term. All the three services are in dire need of modernisation. Most of the new equipment that is being inducted is only replacing legacy and obsolete equipment without greatly enhancing either capacity or capability.
India is under constant threat from two nuclear armed neighbours with an unholy nexus that ‘is higher than the highest mountain and deeper than the deepest sea’ who are constantly sniping at India’s heels. While Pakistan’s hostility with India is pathological, it is the Chinese threat with its clearly articulated ambition of Asian superiority and global supremacy that is of concern. Its economic engagement with Pakistan and its investment in the China Pakistan Economic Corridor (CPEC) to further its own ends of accessing the Arabian Sea through a land route while miring Pakistan in debt and manipulating it thereafter to do its bidding spells trouble for India across two fronts. India therefore has to be prepared to engage on both fronts simultaneously at varying levels of engagement.
The constant refrain that India is ready for a two-front war is reassuring but in the absence of an articulated long term security strategy and the lack of any meaningful debate on national security in the country’s Parliament, the parameters which determine this readiness are nebulous to say the least. A well-articulated strategy would define the extent of the threat on each front, the threshold of escalation, our diplomatic and military response mechanism, the nature and duration of conflict on each front, the ability of the nation to absorb the economic fallout, the acceptable level of attrition, the capability and capacity required to engage and to win decisively to name just a few.
The standoff with China across the LAC which began in April this year is not likely to abate soon. This is definitely going to influence the financial planners in deciding this year’s allocation for defence and there is reasonable optimism that there would be an increase in the percentage share for defence. It is hoped that this will not be restricted to addressing only the immediate threat but will also look at the long term requirement of all the three services.
The prolonged Chinese presence and its continuing encroachment into Indian territory is going to place a considerable strain on the Indian Army to ensure that its logistic lines in the harsh terrain and tough climatic conditions remain uninterrupted throughout the year and its combat readiness is not compromised. This will require both, a higher revenue allocation to maintain the status quo and a higher capital allocation to prepare for the future. Similar will be the case with the air force. Maintaining the edge in the air to counter any misadventure across two fronts and to effectively complement its military strength as well as making good the shortages in the fixed wing and rotary wing categories will need a considerable enhancement in the budgetary allocation.
From a long-term security perspective, it is perhaps the navy that needs the most attention because it is the oceans which will have the maximum impact on India’s long term security and economic wellbeing. However, over the years, the navy’s share of the defence budget has been steadily declining ; from a high of about 18% a few years ago, it is now hovering around 14% which is clearly less than adequate to meet the navy’s requirement. Despite being highlighted time and again by successive Chiefs of the Naval Staff, it has not resonated enough to make a difference.
China’s actions in the South and East China Seas and the Taiwan straits has clearly demonstrated its intent to dominate the waters of the Indo-Pacific. It is steadily increasing its presence in the Indian Ocean. It has established a full-fledged naval base in Djibouti and is attempting to reorient the existing maritime order in the Indian Ocean through a network of port and maritime related infrastructure as part of its ambitious Belt and Road Initiative. It is seeking to alleviate its vulnerability at the choke points in the eastern Indian Ocean, by building access over from its mainland to the Indian Ocean via the Pakistani port of Gwadar in the Arabian Sea and the Myanmar port of Kyaukphyu in the Bay of Bengal. It is trying to shape India’s maritime neighbourhood in its favour through military and economic diplomacy. China’s attempt to fill the vacuum created by US sanctions on Iran, if successful, will give the Chinese navy access to the Iranian ports in the Straits of Hormuz and with its control over Gwadar will seriously jeopardise India’s energy security, 60 percent of which is sourced from the Arabian Gulf. This has very grave long-term implications on India’s stability and economic well-being.
China is expanding its maritime strength at a breath-taking pace. It has the world’s largest navy, the world’s largest coast guard, a huge maritime militia and the world’s largest fishing fleet which is operating with impunity across the oceans. While it may not yet have the sea legs to challenge India in the Indian Ocean, the situation could well be different before the end of this decade if India continues with its sluggish and myopic approach to developing maritime capability; in fact the Navy has been so starved of funds that it has had to cancel or scale back programmes that were initiated over a decade ago leading to an alarming deficit in critical areas of its war fighting capability. The demands on the navy in the last few years have been immense. It has maintained an unprecedented operational tempo with its multi mission deployments, exercises with foreign navies, its training and other operational commitments and remaining combat ready at all times. With ageing platforms and severe budgetary limitations, the navy is being stretched very thin.
The nation is faced with an unprecedented security challenge. A long-term comprehensive approach towards enhancing capacity and capability across the three services is an inescapable and immediate imperative. It is hoped that this budget will be the harbinger of overdue change in the defence planning process towards providing the Armed Forces the capacity and capability it requires to secure India’s frontiers and its interests anytime and anywhere in the world.
(The author is Indian Navy Veteran, a submariner & Vice President Indian Maritime Foundation. Views are personal and do not reflect the official position or policy of Financial Express Online.)