The case for better defence spending

[Adux]

http://www.financialexpress.com/fe_full_story.php?content_id=157750
The case for better defence spending

Is India’s budget in this sector in consonance with the country’s strategic aspirations?

DEBA R MOHANTY
Posted online: Thursday, March 15, 2007 at 0000 hours IST





Allocations for national defence for the year 2007-08 have gone up to Rs 96,000 crore—a rise of 11.4% from last year’s revised expenditure of Rs 86,000 crore. Allocations for revenue expenditure, which include heads like ‘pay & allowances’, ‘works’, ‘stores’, ‘transportation’ and so on, accounts for 56.3% or Rs 54,078 crore of the total defence expenditure (TDE), while allocations for capital expenditure, which includes heads like ‘aircraft & aero-engine’, ‘heavy & medium vehicles’, ‘naval fleet & dockyards’, ‘joint staff’, ‘ordnance factories’, ‘R&D’ and others, accounts for 43.7% of the TDE, or Rs 41,922 crore. In all, the TDE accounts for 14.1% of the central government expenditure (CGE), less than 9% of total government expenditure (central+state), and less than 2.2% of India’s GDP.
Across the world, both absolute and relative indicators in military efforts denote elements of strategic behaviour of state actors. Although both indicators invite subjective interpretations by analysts, they nevertheless highlight some broad directions in which nation-states manage their affairs. It is in this context that a study of military expenditure trends becomes important. India’s strategic ambitions, elements of which have been noticeable through statements emanating from the highest levels of political leadership, have in recent times had what may be termed an expansionist character. Such ambitions reflect a blending of both offensive and defensive elements of military power, which are designed to enable India to play the role of a strategic stabiliser on the world stage.


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Trends in India’s defence expenditure suggest a few pointers. First, the ratio of defence expenditure to GDP has remained stagnant at below 2.3% for the past 10 years, and is not likely to be hiked despite demands from powerful quarters. Second, India’s defence expenditure accounts for less than 2% of global defence expenditure currently estimated to at over $1.1 trillion (at current prices), and stands nowhere near big spenders like the US, UK, France and Germany in the West, and countries like China elsewhere. Third, there is a definite trend towards declining revenue expenditure while capital expenditure has witnessed a near threefold growth within just five years. It is also important to note that capital outlays for ‘joint staff’ has been increased from Rs 258 crore to Rs 320 crore.

Fourth, real term increases in India’s defence expenditure actually show a dismal record, if inflation is taken into account. The real term value of defence expenditure has indeed declined by around 10% per annum for the past couple of years. Fifth, a large chunk of the funds earmarked for capital expenditure is surrendered year after year. An average of as much as 10% of the budgeted amount, varying between Rs 5,000 and 9,000 crore, remained unspent for the past five years. Even in the current financial year (2006-07), the unspent amount is to the tune of Rs 3,000 crore. And last but not least, the share of defence R&D budget, which currently stands at Rs 5,886 crore, is a paltry 6.1% of the total defence budget, while it accounts for around 1% of the total global investment in military R&D, estimated to be around $100 billion currently (the US accounts for nearly 80% of the known total).


It is fair to say that India’s defence budget has witnessed only a modest hike. The allocations are considered deficient if one takes a holistic look at India’s grand strategic ambitions, which in turn necessitates a lean, modern and well-equipped fighting force for defence against both traditional and non-traditional forms
of warfare

Fund allocations for capital purchases for the past few years suggest that hardware elements of India’s military modernisation have been given primacy. India’s hardware requirements, at least for the medium term future (15-20 years), are considered quite substantial. Thus, it will be no surprise to see a corresponding increase in capital expenditure for the foreseeable future. However, the ‘unspent’ syndrome mostly associated with capital purchases must be addressed by the stakeholders of the budgetary rationalisation process—the ministries of finance and defence, and the services headquarters. It is important that integrated long-term defence planning is accorded top priority. The revenue expenditure is witnessing a real term decrease for the past few years, which otherwise suggests a conscious attempt at a desirable rationalisation of revenue spending. One will not be surprised if future revenue expenditure is further pruned. India needs to examine the global trends in force restructuring efforts, which otherwise address only issues like force manpower planning and rightsizing in isolation of the larger context. India must address these important issues keeping an eye on the changing nature and direction of the security scenario at local as well as global levels.

In all, it is fair to say that India’s defence budget has witnessed only a modest hike. The allocations are considered deficient if one takes a holistic look at India’s grand strategic ambitions of becoming a strategic stabiliser, which in turn necessitates the possession of a lean, modern and well-equipped fighting force for defence against both traditional and non-traditional forms of warfare. While a reasonable hike would not have raised many eyebrows in India or elsewhere, budgetary rationalisation through prioritised allocations and force restructuring can compensate for the low spending. The demand for ‘more’ must be calibrated within this framework.

—The author is a senior fellow in security studies at the Observer Research Foundation, New Delhi. E-mail: deba205@gmail.com