 "One rank, one pension gets nod")
While the overall defence budget figure would suggest the armed forces have not returned money left unspent, a closer look at the figures reveal modernisation of the forces has taken a hit.
The Budget estimate for capital for the three services was Rs 86,740 crore in 2013-14. However, the revised estimate — that is, what was actually spent — was Rs 78,872 crore. This means nearly Rs 8,000 crore was left unspent.
According to Laxman Behera of the Institute of Defence Studies and Analyses, the money was diverted to meet revenue needs — that is, pay and allowances of the Indian armed forces which have gone up from Rs 102,322 crore (BE 2013-14) to Rs 118,728 (RE 2013-14), an increase of Rs 16,400 crore. So most of the 10 per cent increase in the budget has gone to meet the pay and allowances increase in the armed forces. In 2014-15, the pay and allowances of the armed forces will amount to Rs 127,082 crore.
There has been some increase under the head ‘stores’. This accounts for exchange rate fluctuations. While this is not sizeable, it is avoidable.
Behera says the modernisation needs of the Indian Navy are saturated but the Air Force has taken a major hit. He says, the shortfall in the outlay for the Air Force is nearly Rs 5,200 crore. In a year when the Air Force has to place orders for the complement of Medium MultiRole Combat Aircraft (MMRCA), a shortage of funds makes no sense. He says that the effective increase in the defence budget is 9.98 per cent but the increase in modernisation budget is no more than 3.5 per cent.
However, the most innovative — and potentially most costly — feature of the defence budget was the acceptance in principle of one rank, one pension (OROP), which was mooted by Congress vice-president Rahul Gandhi just two days ago.
Although Finance Minister P Chidambaram announced that he was putting aside Rs 500 crore to finance OROP, the consensus among defence administrators was that even conservatively, the aggregated cost of OROP across the forces and ranks would be anything between Rs 3,000 and Rs 4,000 crore, not counting arrears. This does not include the administrative cost of calculating OROP and will require a veritable army of accounting staff.
OROP means persons in the same rank — regardless of the date of retirement, the last pay drawn and the number of years served in a rank — will be entitled to the same pension. Typically, after a 10-year wage revision done via the Pay Commissions, a Major General may have put in anything between 32 and 35 years in service. However, the last pay drawn and DA (both of which are computed while calculating pension) could vary wildly, depending on how long he might have stayed in that rank.
“The case of every soldier is different. The Indian defence forces have 30 lakh pensioners. Even feeding that data in a computer is a mind-boggling task, let alone working out each case,” said Lt Gen HS Bagga, former Adjutant General in the Indian Army who has worked on OROP in the past. What Gen Bagga suggests is partial equity — five year blocks in which people in the same rank could be given the same pension. Otherwise, he says, an army of people will be required just to address the administrative issues arising out of OROP.
However, political reactions to OROP were generally favourable, with Gujarat Chief Minister Narendra Modi upholding it as the most important element in the Budget.
The Congress party obviously feels the move could have electoral gains, especially in constituencies that have a big section of ex-servicemen.