No room for grey areas in defence allocations

Gp Capt Murli Menon (Retd)

Defence analyst

The latest Stockholm International Peace Research Institute (SIPRI) report lists India as the world’s top arms importer, accounting for 11 per cent of all such international imports between 2018 and 2022.

Saudi Arabia, China, Qatar and Australia are the other four main importers, followed by the US, Pakistan, Egypt, South Korea and Japan. This report, by itself, may not portray a holistic picture of the place defence occupies in the budgetary priorities of these nations or the efforts they are making to reduce their import bill.

President Joe Biden recently unveiled the breakdown of the US defence budget, pegged at around $842 billion, and in a few years it is expected to touch $1,000 billion. While the American security interests encompass heavy allocations for research and development, new areas of interest such as the Indo-Pacific Command and new ventures in space and nuclear technologies, India has its own requirements to meet the security challenges, situated as we are in a strategically volatile region, with neighbours none too friendly and just awaiting opportune moments to breach our security over land, sea and air.

The defence budget allocation for 2023-24 is Rs 5.94 lakh crore (just $72.73 billion). The Chinese defence spending for the year is expected to be around $225 billion, which gives us a comparative mosaic of the world’s three leading strategic players.

Coming to Indian security imperatives, the need for substantial funding for defence procurements and servicing is reinforced by our overall security scenario. It used to be the opinion of the strategic community that our defence budget should be at least 3 per cent of our GDP. But the global and regional developments of late may call for an upward revision of this ballpark, mainly as shown by the Ukraine war on one hand and China’s attempts to unilaterally alter the Line of Actual Control (LAC) on the other.

Pakistan being in a deleterious economic predicament as of now, Indian defence planning has to be remodelled much more on the global scenario and India’s strategic aspirations in the emerging order.

Increased allocations for pay and allowances and pensions are inescapable. Even the Americans have made a 5 per cent raise in pay in this year’s defence budget. India’s peculiarities in security management include the low-intensity conflict requirements necessitated by the prevailing counter-insurgency situation, specifically in the North-East and against Maoist elements elsewhere.

These are contingencies which other countries may or may not have to factor in. The need for careful dovetailing of our paramilitary budgeting and defence budgeting cannot be overemphasised. While some aspects such as air power, electronic combat, search & rescue and air defence have to cater to multi-agency environments, the enlarged threat spectrum puts an additional burden on the national exchequer.

Another important aspect in defence budgeting is the provision for non-defence expenses accrued by various headquarters. The US defence budget this year has kept $44 billion for such expenditure. While our defence budget does have separate allocations for capital outlay, revenue, pensions and defence civilians, the allocations for R&D and other innovative measures need to be increased considerably. The US defence R&D allocation this year is $145 billion, with $170 billion separately earmarked for procurements. Besides, another $60 billion is earmarked for aircraft development. They have a separate head for air power procurements, unlike in India where aircraft procurements fall under the capital budgets of the three services. Proper code heading of various aspects of budgeting is the key to proper defence management and prioritisation.

The US defence budget has separate allocations for new weapon technologies and new bases coming up in the Philippines and its Pacific posturing against China. The Indian defence budget has several aspects linked to the increased Chinese threat, but we stop short of mentioning this categorically, perhaps for fear of antagonising China. There is also a lack of clarity in our defence allocations for our strategic missile programmes. Calling out such allocations clearly would also have payoffs in terms of psychological operations and cyber war. So, perhaps there is a case for clarity in nominating budgetary heads, such as separate allocations in the US budget for hypersonic weapons and cyber warfare.

Comparisons with the US defence budget may not be wholly valid in all respects, but the clarity in nominating allocations for innovative and modern projects is something we could emulate. Also, the presidential system of government in that country may be amenable to such a proactive approach to budgeting, which our traditional parliamentary democratic setup may not be comfortable with. For example, this year the US has gone in for a pay hike for their servicemen, whereas we in India are still agonising over One Rank, One Pension and modalities for its disbursement.

Assessing India’s defence requirements vis-à-vis its development priorities in terms of budgeting is the key challenge for our financial planners. Innovative measures to find the monies for meeting defence requirements, more so in the backdrop of Atmanirbharta, should be the order of the day. Also needed are appropriate constitutional reforms to meet the funding challenges, be it for new projects such as Agnipath/MMRCA (Medium Multi-Role Combat Aircraft) or for finding the monies through suitable private-public partnerships.

The rapid degree of obsolescence in defence technology would necessitate timely adaptation and import of technology till our indigenous capabilities in manpower, training, manufacturing and public-private partnership reach global standards in cutting-edge fields.

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