Tuesday, 10 March 2015

For the armed forces, Budget brings no cheer



By Ajai Shukla
(Expanded version of Business Standard article)
10th March 2015

The defence budget announced on February 28 has disappointed the army, navy and air force. With acquisitions in the pipeline worth over Rs 20 lakh crore, military planners protest that the capital budget allocation of Rs 94,588 crore --- not even a rupee more than what was allocated in last year’s budget --- is far less than what is required.

Rs 31 lakh crore worth of acquisitions are needed over a 15-year period, say top level sources in the Integrated Defence Staff (IDS), which carries out long term planning of acquisitions for the three services. This is formalised in the classified Long Term Integrated Perspective Plan (LTIPP), which compiles the military’s equipment requirements over the 12th Defence Plan (2012-13 to 2016-17), the 13th Plan (2017-18 to 2022-23) and 14th Plan (2023-24 to 2027-28).


Budget projections: 2012 - 2027

User
Capital budget
12th Defence Plan
13th Defence Plan
2012-13
2013-14 (RE)
2014-15 (RE)
2015-16 (BE)
2016-17
2017-18
2018-19
2019-20








Army
10872
10749
16868
21574
23731
26104
28714
31585
Navy
16889
19600
17471
23911
26302
28932
31825
35008
IAF
31053
36017
31818
31481
34629
38092
41901
46091
Other*
11685
12506
15808
17622
19385
21324
23457
25803









Total
70499
78872
81965
94588
104047
114452
125897
138487














Capital budget
13th Defence Plan
14th Defence Plan

TOTAL
2021-22
2022-23
2023-24
2024-25
2025-26
2026-27
2027-28








34744
38218
42040
46244
50868
55955
61551
499817
38509
42360
46596
51256
56382
62020
68222
565283
50700
55770
61347
67482
74230
81653
89818
772082
28383
31222
34344
37778
41556
45712
50283
416868








152336
167570
184327
202760
223036
245340
269874
2254050














Adding to the military’s disquiet is the repeated inability of the ministry of defence (MoD) to spend the capital budget on new equipment. Year after year, chunks of the capital budget are surrendered unspent, or diverted to the revenue budget for funding running expenses like military salaries, and maintenance of equipment.

In the current year, the MoD has managed to spend only Rs 81,965 crore of the Rs 94,588 crore allocated for capital spending, a shortfall of Rs 12,623 crore. Rs 6,630 crore was returned to the finance ministry, while over Rs 6,000 crore were diverted to expenses like salaries.

A Business Standard analysis of equipment requirements over the next 15 years and the likely fund availability during this period finds a precarious balance between needs and means.

In the near term, there is precious little money to meet the three services’ requirement of Rs 20 lakh crore worth of equipment. However, as the years go by, especially in the next decade, an expected real increase of 10 per cent per annum will have allocated Rs 22.5 lakh crore by the end of the 14th Defence Plan in 2027-28 towards the military’s capital budget (see graphic below).

This includes a cumulative total of Rs 5 lakh crore for the army, 5.65 lakh crore for the navy, and Rs 7.72 lakh crore for the air force. Another Rs 4.17 lakh crore will provide capital funding for Defence R&D Organisation (DRDO), Ordnance Factory Board (OFB), joint staff, army railroads and military land and buildings.

Given the army’s requirements of Rs 5.29 lakh crore, that leaves a shortfall of Rs 30,000 crore. The navy will be short of Rs 1.75 lakh crore, given that it must spend Rs 7.4 lakh crore. The air force alone might have the money it requires, with budgetary projections providing it Rs 7.72 lakh crore to meet its equipment requirements of 7.28 lakh crore.

These projections assume that the distribution of funds between the three services remains static. In fact, the share of the navy has steadily grown over the years, rising from barely 5 per cent of the overall defence budget to 16 per cent today. The military implications of a “Look East, Act East” policy might result in further increases to the navy, with some analysts predicting that the navy’s allocations might inch up to 20-23 per cent of total military spending. That would come at the cost of the army and air force.

Future budgetary projections are always uncertain, and Lieutenant General Anil Chait, who coordinated tri-service budgetary and acquisition planning until he retired as chief of the Integrated Defence Staff (IDS) last May, points out that Business Standard’s funding projections assume low inflation and a stable rupee. With 60 per cent of the military’s equipment requirements being sourced from abroad, any significant rupee devaluation would indeed buy less bang for the Indian buck.

Even so, financial planners within the military admit that, given the current inflation environment and a stable rupee, these calculations are probably realistic.

Army: battling for modernisation

System
Cost
Remarks

(Rs crore)  

145 ultra light howitzers
5000

1580 towed artillery guns
15750
Cleared in Nov 2014
814 mounted gun systems (MGS)
4700

100 tracked self-propelled guns
3000

414 Dhanush guns from OFB
2000

2 regiments Pinaka rocket launchers
5000

Brahmos missiles
3500

Strategic missile systems (nuclear capable)
20000

Armour upgrade and new tanks
10000
T-72, T-90 and Arjun
Future Main Battle Tank (FMBT)
60000
1000 new tanks
Future Infantry Combat Vehicle (FICV)
60000
2600 new ICVs
Short Range Surface-to-air Missile (SR-SAM)
30000
Develop and produce
Tactical Communications System (TCS)
20000
Under “Make” category
Battlefield Management System (BMS)
50000
Under “Make” category
Rifles, carbines, machine guns and sights
12000

Future Infantry Soldier as System (F-INSAS)
10000
Under “Make” category
Unmanned Aerial Vehicles (UAVs)
6000

Dedicated army mobile networks
3000

Anti-tank guided missiles
10000
300 Spike cleared
Surface-to-air missile systems
30000
SR-SAM and Akash
Miscellaneous gear, arms, ammunition
100000

Raising of mountain strike corps (MSC)
70000
Estimated cost



TOTAL
5,29,950


While the army remains the service most in need of modernisation, land systems in general are significantly less expensive than aircraft and naval equipment. A large chunk of the army’s modernisation budget will go towards procuring, or indigenously building, modern howitzers, rocket launchers and various missile systems. There will be large expenditure on modernising the army’s mechanised forces, including the indigenous development and production of a Future Main Battle Tank (FMBT) and Future Infantry Combat Vehicle (FICV).

Also being developed indigenously is the digital backbone for a “networked force”, which will include communications and data networks like the Tactical Communications System (TCS), as well as soldier-specific networks like the Battlefield Management System (BMS), which was kick-started last week. Besides these high-tech systems, the army will also spend on basic combat equipment, including new rifles, carbines and machine guns.


Another big army expenditure will involve raising a new mountain strike corps (MSC) for offensive tasks on the mountainous northern border. While the government had announced it would spend Rs 67,000 crore on this new formation, most of that money remains to be allocated.

Navy: trouble at the seas

System
Cost
Remarks

(Rs crore) 

Six Scorpene submarines (Project 75)
10000
Balance payment
Six conventional submarines (Project 75 I)
60000
Being processed
Lease of INS Chakra from Russia
4200
Lease payments
Lease of second nuclear sub from Russia
5400
Lease payments
Two Arihant-class nuclear submarines
36000
INS Arihant follow-ons
Six nuclear-powered attack submarines
100000
DRDO project
Seven stealth frigates (Project 17A)
45400
MDL and GRSE to build
Four anti-submarine corvettes (Project 28A)
5000
Balance payment
Three stealth destroyers (Project 15A)
22000
INS Kolkata delivered
Four stealth destroyers (Project 15B)
30000

Two indigenous aircraft carriers
50000
Cochin Shipyard
Six Fleet Support Ships (FSS)
24000

150 Naval Utility Helicopters
15000

139 Naval Multi-Role Helicopters (Navy)
60000
First 16 being procured
8 Medium Range Maritime Recce (MRMR) aircraft
6000

8 P8-I Multi-Mission Maritime Aircraft (MMA)
12000
Deliveries began from December 2012
4 additional P8-I Multi-Mission Maritime Aircraft (MMA)
6000
8 procured earlier
4-6 Landing Platform Dock (LPD)
16000

24 Mine Counter Measure Vessels (MCMV)
36000
To be built in India
2 midget submarines for special operations
2000
Building in HSL, Vizag
12 Dornier aircraft
1850
Building in HAL Kanpur
10 Submarines overhaul
10000

16 ASW Shallow Water Craft (ASWC)
16000

Naval LCA Tejas development cost
3000
Including Mark II
65 Tejas fighters
12000

Miscellaneous gear, arms, ammunition
100000

Development of Karwar Naval Base
50000
West coast base
Development of Rambilli Naval Base
100000
East coast base
Development of Andaman & Nicober Comd
25000




TOTAL
7,40,000


The navy’s Maritime Capability Perspective Plan (MCPP) envisages a 160-ship force that is centred on 90 capital warships, like aircraft carriers, destroyers, frigates and corvettes. While there are currently more than 140 vessels, the navy has barely half the destroyers and frigates it needs. About five ships need to be inducted each year just to replace warships that are decommissioned after completing their 30-40 year service lives. Much of the navy’s modernisation budget, therefore, would go towards constructing new warships and submarines.

Submarines will form a thrust area. These include twelve conventional submarines, of which six Scorpenes would start rolling out of Mazagon Dock Ltd next year. Another six will be built in India along with a foreign partner shipyard. The DRDO will build another two nuclear missile-carrying submarines of the Arihant class (SSBNs); and develop and build six nuclear-powered attack submarines (SSNs) in India. INS Chakra, the SSN leased for ten years from Russia, will be joined by a second leased SSN.

Capital warships are being built in numbers, including seven stealth frigates under Project 17A; four stealth destroyers under project 15B; two indigenous aircraft carriers, INS Vikrant and Vishal, and four anti-submarine warfare (ASW) corvettes under Project 28A. In addition, the navy will acquire six fleet support ships (FSS), 4-6 landing platform docks (LPDs) for amphibious assaults on enemy coast lines, 24 mine counter measure vessels (MCMVs) to guard against sea mines laid by the enemy outside our ports, harbours and on shipping lanes.


 A hefty chunk of expenditure will go towards developing a brand new naval base on the Andhra Pradesh coast at Rambilli, which will be the key operational base for the Eastern Naval Command. Money will also be spent on the Western Naval Command’s premier new base at Karwar, and on naval facilities in the Andaman & Nicobar Islands in the Bay of Bengal.

Air strike capabilities

System
Cost
Remarks



126 Rafale medium fighter
120000
Under negotiation
LCA Mark II development cost
2500

123 Tejas fighters
20000

125 Jaguar re-engining and upgrade
18000

51 Mirage 2000 upgrade
15000

80 Sukhoi-30MKI production
30000
Balance remaining
272 Sukhoi-30 overhaul
30000

Fifth generation fighter development
30000
Partnership with Russia
144 Fifth generation fighters production
65000
In Russia and India
150 Advanced Medium Combat Aircraft
100000
Develop and build
Multi-role Transport Aircraft development
5000
Partnership with Russia
45 Multi-role Transport Aircraft production
6750
In Russia and India
56 Avro aircraft replacement programme
15000



60 Hawk advanced jet trainers
6000

22 Apache AH-64E attack helicopters
8500

15 Chinook CH-47F heavy lift helicopters
6600

126 Basic trainer aircraft (BTA)
5000
Pilatus and HTT-40
85 Sitara intermediate jet trainers (IJT)
8500
Being built by HAL
384 Light Utility Helicopters (LuH)
13500
To be built in India
80 Dhruv/Rudra advanced light helicopters
4000
Being built by HAL
Surface-to-air missile defences
30000
MR-SAM and Akash
Miscellaneous gear, arms, ammunition
200000




TOTAL
7,28,350


With just 35 fighter squadrons operational presently against the air force’s authorised strength of 42 squadrons; and with another 11 squadrons likely to be decommissioned before the end of the 13th Defence Plan, the air force’s focus is on acquiring fighter aircraft. Besides the Rafale medium multi-role combat aircraft (MMRCA), it will buy six squadrons of Tejas light fighters; 80 more Sukhoi-30MKI fighters under an existing contract; and upgrade its fleet of 50 Mirage 2000 and 125 Jaguar fighters. There is an Indo-Russian development programme under way for 144 fifth generation fighter aircraft (FGFA); and another DRDO development project for at least 150 advanced medium combat aircraft (AMCA).

Transport aircraft are another thrust area, including the Indo-Russian programme to develop a multi-role transport aircraft (MRTA); the replacement of 56 Avro HS-748; and the on-going procurement of C-17 Globemaster III heavy lift aircraft from the US. In addition, the air force is procuring large numbers of helicopters, including the billion dollar purchases of the Apache AH-64E attack helicopter and the Chinook CH-47F heavy lift chopper.

These procurements do not include a host of high-tech development projects that are planned for developing the battlefield capabilities of the future --- space surveillance; launch-on-demand satellites; hypersonic vehicles that will translate into more effective strike vehicles; electronic warfare systems; cyber warfare capability; active armour; active counter-IED technologies, unmanned combat aerial vehicles to replace manned fighters and a range of drones that have precision strike capabilities. The DRDO also has programmes under way to develop high altitude long endurance (HALE) and medium altitude long endurance (MALE) drones, long range cruise missiles and an anti-ballistic missile shield to shoot down incoming nuclear-tipped ballistic missiles.


None of these have been budgeted for, except through the DRDO’s budget. However, in a 15-year perspective, some of these projects might will reach fruition, and their introduction into service would require additional funds. 

7 comments:

Anonymous said...

Given the need for fiscal tightening and the gravy train of NREGA and food, fertilizer and Fuel subsidies - where is the government going to get the revenue ?

As such, the present state of fiscal consolidation is entirely due to the fall in the oil prices, the trimming of subsidies and the coal auctions.

Military spending lags the economy and as such military allocations can be expected to be more significant in the following years.

Satpathy said...

Col. under the Airforce CAPEX you've listed the LCA MK-II dev cost of 2500 crores twice.

Anonymous said...

I think you missed LCH in both Army Av and AF.
Also SR Sam (Akash) for Army and lca2 dev cost for IAF have been counted twice.
Overall a very comprehensive article on projected requirements though bringing out the key thrust areas as well as gaps in funding clearly.

joydeep ghosh said...

@Ajai sir

back in your blog after long time, have patience in reading the long post

I believe MoD and its constituents are the largest holder of land in India, i believe a lot of that land if put to use can help provide MoD with huge chunk of cash

Now lets talk about the modernization chart for IA, IAF, IN put up by you:-

IA:-

1. If i am not wrong MoD isnt buying ULH mainly due to cost. Improved roads can cut the need for ULH, your views

2. Why there is need to buy towed, mounted, tracked arty guns, feel 2800 MGS (like Caesar, C130J-SH can carry 2) will bring commonality, cut cost, your views

IN:-

1. I think there is no need to go for P75I afresh, as upgraded Scorpene can suffice, also Brahmos Mini that can be launched from Torpedo tubes will make SSKs a potent killing machine, it will cut cost, improve use/service, your views

2. Think having MRMR in the same platform as LRMR (Boeing 737) will increase commonality, service, your views

3. Think there was no need for 4 Destroyers under 15B, adding 4 more under 15A would have added commonality, cut cost, your view

IAF:-

1. Thanks for accepting that IAF will go for 350 Su30MKIs, (said it long back)

2. Still think after spending over US$25B on PAKFA & work share of just 20%, the number of PAKFA/FGFA should have been 250 atleast, your view

3. Feel that with Tata getting ready to build Do228 in India its upgraded version Do328 can fulfill need for HS748 replacement (meant for officer transport), your view

4. Feel setting up a assembly/MRO for C130Js not the SH will help boost business as well as negate need for MTA, your views

5. BTW you missed out of the LCH (light combat helo), think using LCH to shoot drones is like using sword to cut cake, your views

hope to get your answers

thanks

Joydeep Ghosh

Jean Luc Picard said...

Mr Editor,

In the Army's Budget I see no funds allocation for Army Aviation.

No Budget Allocation for LCH,LUH,ALH/ALH-WSI or any support related infrastructure.

In the future Helicopters armed/unarmed will play a crucial role in combat operations. We get a glimpse of it in US/ISAF operations in OEF in Afghanistan and Desert Storm and OIF in Iraq.

They were used in Neptune Spear for executing Bin Laden and for that matter even the chinese landed and supplied its troops near DBO for the 20 odd day stand off with India.

They also were used in large numbers in the recent successful military operation which resulted in the inclusion of Crimea with the Russian Federation.

Attack helicopters are excellent for Anti Armour.

The Dhruvs and Rudras and LUHs would be a faster option for troop insertion, casualty evacuation, special operations and CI Operations when required to hover on station and provide CAS.

So why is the Army not cutting its costs on development of a new FMBT and FICV which together constitute 1,20,000 of the capital Budget.

No form of Armor today provides complete protection from IEDs which are the primary killers in Afghanistan today. No ICV can withstand shoulder launched RPG-7s fired from rooftops or close ranges in Urban areas.

Armor/ICVs are difficult to operate on the North Eastern front in Himalayan frontier. Once over the hump in Tibet of course is a different picture.

So why not invest in Air Mobile Fighting formations rather than Mechanized Infantry fighting formations ?
When we already have the helicopters nearing production.

Anonymous said...

The way ahead from this mess lies within the article. 1) SPEND the allocated budget this financial year! that itself will increase induction. 2) Increase indigenous production and design. This will itself increase buying power of budget. 3) Learn from Chinese example they are straigh away building 2 aircraft carriers without the prior experience of even having operated one!! Where is Indian spirit of innovative design??

ashok said...

the colonial feudal set up of the armed forces now is overburdened and needs a major overhaul where two service three service theatre commands are created , assets combined , manpower integrated and coatguard merged or integrated with navy . The intial training of officers and sailors be common and after 10 to 12 years in service segragated into navy and coast guard . higly trained , electrical , engineering and other arms and services can then be allowed to serve till 58 years in coast guard . similarly BSF , ASSAM RIFLES SSF ITBP SSB BE MERGED WITH ARMY AND BECOME FEEDER SERVICES FOR THE TRAINED OFFICERS AND RANKS WHO AFTER 5, 10 AND 15 YEARS BE SECONDED PERMANENTLY TO SERVE IN THEM .