The defence budget reveals India's core weaknesses

Budget has provided for just a 4.27 per cent rise in defence allocation for 2017-18

The Union Budget has been widely praised for its propensity to do no harm. One notable exception to this trend is the defence budget, which reflects a neglect of a real and present danger. The country faces threats on two fronts, which absorb military personnel and resources round the year in some of the world’s most inhospitable terrain, and it is being increasingly challenged along its long maritime border. Yet, the Budget has provided for just a 4.27 per cent rise (over revised estimates of 2016-17) in defence allocation for 2017-18 to Rs 3,59,854 crore. This sum masks many problematic facts. One is the sheer inadequacy of the allocation — as a percentage of the gross domestic product, defence allocations have actually fallen from 2.29 per cent (2016-17, revised estimates) to 2.14 per cent (2017-18) and as a share of government expenditure, they have fallen from 17.1 to 16.8 per cent. The second is the deep structural constraints within the defence expenditure. 

As a result of the Seventh Pay Commission recommendations and the move to accept the One Rank One Pension (OROP) formula, pay and pension alone will take up almost 70 per cent of allocations for the army, 53 per cent for the navy and 47 per cent for the air force in 2017-2018. On the whole, OROP alone will see the pension bill swell from Rs 60,238 crore in 2015-16 to an estimated Rs 85,740 crore in 2017-18, only a little lower than the projected capital budget (Rs 86,488 crore) for the year. This and the steady expansion of conventional forces — puzzling when modern military doctrine focuses on special forces — has the effect of crowding out capital expenditure, much of it sorely needed to provide the defence forces with equipment as basic as helmets, bulletproof jacket, rifles and artillery as well critical material such as submarines, warships and fighter aircraft. 

Then again, the nine per cent rise in allocations for capital expenditure for 2017-18 at Rs 86,488 crore may look generous on paper but is illusory when set against the reality that the ministry underspent by almost Rs 7,000 crore in 2016-17. This, too, is part of a trend — in 2015-16, for instance, the ministry underspent Rs 13,188 crore from its capital budget, 14 per cent of the sum earmarked for the year. Overall, in spite of its stated aim of revamping the convoluted procurement process, defence capital expenditure by the National Democratic Alliance regime has been flat. Each year, the government has argued that the consistent under-spending on the capital account negates the need for a major rise in allocations on this head. 

The reality, defence officials say, is a de facto slowdown by the finance ministry in the second half of the year. The principal problem here is the degree to which government clearance is required — each service can sanction expenditure only up to Rs 150 crore and the defence ministry Rs 500 crore. Anything above that requires finance ministry or cabinet approval. The tortuous process taken to finalise deals — the controversial purchase of 36 Rafale fighters being a case in point — and the inevitable controversies that arise from a decision to eliminate middlemen, rather than fixing the process itself, means that India is short of much of the standard equipment for a modern fighting armed force. Finance Minister Arun Jaitley may not have been able to address all of this in his Budget, but a better understanding of India’s defensive weaknesses through less token increases in allocations would surely have been warranted.