The Defence Budget — Projection & Reality

The Ministry of Defence (MoD) expenditure now comprises 2.02 per cent of the Gross Domestic Product (GDP)-down from 2.22 per cent in FY2020 – and 13.3 per cent of central government expenditure, down from 16.7 per cent

Issue 1 - 2022 By Lt General J.K. Sharma (Retd)Photo(s): By PIB
Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman along with the Ministers of State for Finance, Pankaj Chaowdhary and Dr. Bhagwat Kishanrao Karad depart to present the Union Budget 2022-23.

In light of the recent stand offs between India and China and scurrying for weapons and equipment from foreign vendors through emergency purchase/special financial powers to fill the voids, some deep thinking and innovative Defence Budget was expected. However, the recent presentation by Nirmala Sitaraman, who even had the experience of defence in her avatar as the country’s Defence Minister followed the very set template and the budget has been rather retrograde.

To begin with, the overall defence spending is not only discouraging but rather dismal. The Ministry of Defence (MoD) expenditure now comprises 2.02 per cent of the Gross Domestic Product (GDP)-down from 2.22 per cent in FY2020 – and 13.3 per cent of central govt expenditure, down from 16.7 per cent. This down slide trend of expenditure on defence, which has seen a steady fall since 2010, is most worrying, more so in light of the two and a half front war, which most defence experts have trumpeted repeatedly. It is pertinent to note that the Standing Committee of Parliament on Defence in its recommendations had exhorted that defence spending of minimum three per cent of GDP is “optimal and necessary for ensuring the operational preparedness of the forces”. Why has the Modi Government also, followed a beaten trend and left the forces to fight with whatever it has rather than equipping them well?

The Capital budget has an increase of 13 per cent over the 19 per cent in the current year. Hence there is a net decrease in the Capital outlay. But in keeping with the Prime Minister Narendra Modi’s vision of Atmanirbhar Bharat, the Finance Minister (FM) has earmarked 68 per cent allocation of the capital procurement budget in defence for domestic industry, which is an increase of 10 per cent from the previous year of 58 per cent. This would give a fillip to ‘Make in India’, boost demand and build capacities for a stronger, prosperous and confident India. But in the immediate, it would not translate in to better hardware as it will take a few years for the local manufacturing expertise to evolve to the level of delivering useable weapons and systems. Moreover, an umbrella protectionism often disincentivises companies from making world-beating products. The Atmanirbharata will thus have its costs, at least in the short term, and the armed forces will bear a significant brunt of this cost.

An umbrella protectionism often disincentivises companies from making world-beating products. The Atmanirbharata will thus have its costs, at least in the short term.

The allocation of 25 per cent of the Research & Development (R&D) budget to incentivise industry-led research, by developing military platforms and collaborative efforts in a Public Private Partnership mode, with Defence Research and Development Organisation (DRDO) and other research institutions, is important as it will reduce dependency on the import of defence equipment and further lead to job creation. This is the first time an allocation has been made for Industry-led R&D in a collaborative mode, assuring assistance from DRDO and encouraging Public Private Partnership models with research institutions and other academic institutions. Collaboration with foreign research labs and centres is also encouraged.

It has been stated that the highest priority in procurement will be under the Indigenously Designed, Developed and Manufactured (IDDM) category. This allocation finds synergy with the stated policies and encourages the spirit of creating domestic design and encourages Intellectual Property creation and sustenance. This places an enormous responsibility on domestic suppliers to meet the challenges and become ready to supply platforms and systems. This indirectly increases capacities, new production facilities, increased collaborative framework with Foreign Original Equipment Manufacturers (OEM) and more Joint Ventures (JVs) and increased investments. Foreign OEMs, those who can appreciate the increased focus on domestic spending, will be lured in to finding Indian design and production houses for JVs, teaming arrangements, technology transfers and establish a base in India.

A dispassionate analysis clearly will point out that we will again be only scurrying for weapons and systems when another Galwan happens or drone attack like in Jammu airbase in the near future. An endeavour to fulfil the needs still continues to be a far cry. Defence planning and equipping needs a long term perspective, an apolitical drive and a deeper understanding of short, mid and long term threats and goals. The lack of National Security Strategy, Doctrine and thus document will continue to haunt us till we have it well defined, wellarticulated with merciless implementation. Only the allocation of money without the vision of ideal force structuring and equipping would never translate in to strong military power. The Defence Forces may continue to deliver but at a great cost.