A sense of gloom has enveloped India over the last few months. There is not a day when the electronic media does not spell out scenarios of disaster - all despite the fact that even a 5 per cent growth of GDP in the year, if that comes about, will be the third highest in the world. From a heady 8 per cent per annum growth through eight years, the downfall is seen as calamitous; in the same two years China has fallen from 11 per cent to 7.5 per cent, and one hears no talk of that country going down in a heap. Admittedly, their base is higher but a fall is a fall and must hurt.
It is a particularly Indian trait to exaggerate anything, good or bad; at 8 per cent we were "destined" to become the third-largest power by 2025, while at 5 per cent we are in the doghouse. Even more important, and distressing, is the inability of political parties to see events in the national context rather than in terms of possible electoral gains. The irony cannot be missed because they all fell in line behind the two legislations which will have the most deleterious impact on our economic health and growth, namely the Food Security and Land Acquisition Bills.
But this is not about the economic downturn but to analyse its impact on the modernisation and capabilities of our armed forces. The two are not unrelated, impacting on our domestic as well as external interests; both economic growth and military strength, along with others, are important constituents of India's national power. As resources have to be the pivot of these two, the impact of financial constraints on our military's posture merits consideration. For the ongoing fiscal year, the defence budget adds up to '2.05 lakh crore, of which some '1.15 lakh crore is the outlay on what is called Revenue (maintenance) expenditure and the remaining '0.9 lakh crore on Capital (modernisation) schemes. The former part is quite inelastic, with the bulk going on salaries of personnel; their moves on duty; for training, fuel and stores needed for routine activity; and on the maintenance of existing civil works and infrastructure. Almost every year, this outlay is subjected to some cuts, the impact of which is borne by the non-salary components.
The Capital element itself needs some elaboration. Of this year's allocation, nearly '0.75 lakh crore is to be consumed by things already contracted, and for which payments have to be made, leaving no room for adjustment - if anything, the commitment has increased with the devaluation of the rupee. Therefore, new modernisation slated for finalisation in this year will have less than '0.15 lakh crore available. Assuming that any new scheme will require about 20 per cent to be paid on the signing of the contract - typical for most items procured from foreign sources - this means that, in the remaining months of 2013-14, we can finalise new schemes costing about '0.75 lakh crore, assuming that no major commitments on this score have been made in the six months that have already elapsed. This translates to $12 billion-odd at the current rate of exchange, requiring $2.5 billion to be paid this year. This can just about cover the purchase contract for the 126 multi-role aircraft (Rafale) now under negotiation, and very little else.
There are other important projects, such as placing orders for additional P-8I surveillance and anti-submarine aircraft for the navy, C-130Js and C-17s for the air force and FH77 guns for the army. The question, therefore, is what does one contract now, and what does one put off for better times - read next year? Raising a new corps for the Army at a cost of '0.6 lakh crore, recently approved by the government, is not an issue, as its impact is not likely to be felt in 2013.
Clearly, in the prevailing climate, there is little possibility of any additional sums of money being made available to the military. If anything, it may, once again, have to live with a cut in its Revenue expenses - which has a cost of its own. But the bottomline is this - a decision will need to be made in respect of the major items highlighted above; guesstimates indicate that it will be the 126 aircraft deal versus the rest. There is a clear distinction which needs to be understood. The P-8I/C-130J/C-17 aircraft give to us both reach and strategic capability supported by the dedicated surveillance satellite which has been put in space just a few days ago. The FH77 guns are a sorely-needed and much-delayed follow-up for the 155mm Bofors guns, now more than 25 years old. The fighter aircraft are intended as replacements, albeit much more potent, for aircraft to be phased out of the air force. Should it come to war, the last two would be sorely needed. So, the issue boils down to just this: which is more important at this time? Taking steps to strengthen strategic deterrent capabilities, looking at the longer term? Or getting ready to cope with the threat of war in the near future? Not an easy choice for any government to make.
If the answer to this dilemma is that our air power, as it is today, poses sufficient dissuasion to our northern neighbour and meaningful deterrence to the one to our west - in any case, the new fighter aircraft to be ordered will not be available in the next three to four years - then this deal has lower inter se priority than the others and, in the worst case, can be deferred to the next year. Prospects of a full-fledged war with either neighbour are not all that credible at this time - and, frankly, the need to get the guns is not less than getting the fighter aircraft.
At the same time, acquisition of long-range strategic assets is a force multiplier, and plays a dissuasive and deterrent role of a different kind, relevant as it is in an environment - the Indian Ocean region - where we have potential advantages. It also needs to be recognised that countries seeking military conflict as an option have to look at the totality of the equations; not just those restricted to a limited area, which may yield some tactical gains at the cost of penalties, risking vital concerns elsewhere. Political and military planners in Beijing or Pakistan, indeed anywhere, cannot ignore this larger picture as they sit in their councils of war.
This brings us back to the initial question - whether the economic downturn has adverse impact on the modernisation of our armed forces. Only someone very naïve would answer in the negative. But not to the extent that one might imagine. At this time, our focus must be on acquiring those capabilities that can be exploited in the pursuance of the country's larger interests. Both strategic and tactical assets have places of their own; but one acts in support of the other. At this time of financial stress, it is essential to prioritise, should that become necessary, recognising the sum total of India's security interests and concerns. This is what defence and security planning is all about.
The writer was a member of the National Security Advisory Board
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