Raise funds via cess for defence modernisation

Lt Gen Raj Kadyan (Retd)

Former Deputy Chief of Army Staff

THE controversy surrounding the relatively higher revenue expenditure vis-à-vis the capital portion of the defence budget is not new. It keeps surfacing way too often. It got highlighted yet again last month after the Union government announcing the Agnipath scheme. The chief motive behind the scheme is financial. The government’s denial in this regard lacks conviction.

Undeniably, every country needs funds for development, none more so than India, where the development of infrastructure is yet to be on a par with that of advanced western countries. We are still categorised as a ‘developing’ country.

Budget allocation is done for various ministries on an annual basis. There is also a mid-year review, when a revised allocation can be made. Whenever any government department needs additional funds, the Centre may — and in some cases does — launch schemes to raise funds from the public. Invariably, a cess is levied for this purpose. For example, an education cess was introduced in 2004-05. It was meant to finance primary education under the Sarva Shiksha Abhiyan. Subsequently, secondary education and augmentation of the health infrastructure were also included in the ambit of the scheme. Initially, a 2% cess was levied on both corporate and individual income. From the 2007-08 financial year, it was increased to 3%.

Cess is a need-based ‘tax on tax’ that is imposed by the Central government for a specific reason. It is distinct from the other taxes such as excise duty and personal income tax in that it is levied in addition to the existing taxes.

Since both education and health are public services, this tax collection from the public is fully justified. Such levy is common also for many other departments. In some cases, the cess is collected indirectly. To develop highways and improve surface transport, for example, the fuel rate is increased. Every user of the facility thus gets taxed. Similarly, when the Railways needs funds for enhancing or improving their services, the rail fare is hiked. Again, the public pays for the additional funds needed. This system of taxing the beneficiaries is eminently logical.

But there is an exception. Keeping in view our long land and sea borders, and the prevailing security scenario, our defence forces need to be kept in a perpetual state of readiness. They also need to keep pace with the latest technology and modern equipment. All this requires funds. Prima facie, the onus for mobilising these funds is put squarely on the shoulders of the forces’ members. Their allegedly high pensions and salaries are constantly under attack and a perpetual threat exists of their curtailment with a view to pooling money required for their modernisation. Since India does not have a military culture, there is hardly ever a public debate on the subject. This seems unjustified. A soldier is not doing what he is doing for his own benefit. Keeping the nation safe, secure and united is surely a public service. Imagine how strange it would sound if teachers are tasked to raise funds for improving the standards of education, doctors for health infrastructure improvement or the railway employees for the augmentation of train services.

At the end of a financial year, when the ubiquitous auditors arrive with their accounting snares, every user is required to justify the utilisation of allocated funds. The Education Ministry can count the number of new universities and colleges established, the Health Ministry can speak of new hospitals and clinics that have been set up, the Transport Ministry can rattle off figures of additional miles of highways constructed. But what does the national security provider say for the utilisation of the funds allotted for defence? His claim that the country has been kept safe and secure can neither be measured nor counted. To the book-keeper, this appears as a no-change scenario. This vital but intangible contribution is not found convincing and the expenditure gets perceived as wasteful to the layman. The reality is that all other organs and departments of the government can perform their assigned functions only because the country is safe. National security is thus paramount. The rationale that a country’s security forces keep the country safe by just remaining ready gets overlooked. The famous wish for the defence forces, ‘May they never be wanting, and may they never be wanted’ couldn’t be truer. Money spent on defence is not wasteful; it is a vital investment. A fully ready military is the country’s best security guarantee through deterrence.

The high manpower of nearly 14 lakh active soldiers also raises eyebrows in some quarters. It needs to be reiterated that the military does not decide its own numbers. These depend on the prevailing security scenario. And considering our country’s size and civilian-to-soldier ratio, the long and topographically rugged and disputed borders, the numbers are certainly not unreasonably high. Technology can supplement the efforts of soldiers but cannot replace them.

Every Indian has a stake in living in a safe country. And security does not come free or even cheap. It extracts a price, and no price paid for keeping the country safe is too high. If the government cannot allocate the required funds for the purpose, there is a strong case for starting a separate cess for the modernisation of defence forces.

Constant bickering about the shortage of funds and berating soldiers on account of their salaries and pensions can only be detrimental to the morale of those in uniform.

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