Wednesday, 9 September 2015

Army’s manpower costs give reason to rethink policy


By Ajai Shukla
Business Standard, 9th Sept 15

After the dust settles around the “one rank, one pension” (OROP) agitation by ex-servicemen’s bodies, a crucial question will remain: are the military’s manpower policies sustainable? Since 1947, military planners have, ostrich-like, regarded manpower as a cheap and plentiful resource. Human resource policies have never been given the attention equipment acquisition has. The acceptance of OROP, coming after major salary increases in the 6th Pay Commission, make it essential to ponder the manpower question more thoughtfully.

Consider this: out of this year’s Rs 2,46,727 crore defence allocation, Rs 93,216 crore was earmarked for salaries of the military’s 1.5 million uniformed and civilian employees. That is 38 per cent of the defence budget, matching the entire capital budget of Rs 94,588 crore for new warfighting equipment like guns, tanks, fighters and warships.

If it seems worrisome that, in low-wage India, salaries are consuming as much expenditure as equipment, there is worse. The salary figure does not include defence pensions, which are not included in the defence budget, even though pensions form an integral component of the cost of military manpower.

It is instructive to examine manpower costs with military pensions included, as they are in defence budgets everywhere. Factoring in this year’s pension allocation of Rs 54,500 crore, defence spending rises to Rs 3,01,227 crore. Adding pension allocations to the salary bill, actual manpower costs would be Rs 1,47,716 crore, almost half the adjusted defence budget.

That is before factoring in OROP, which Defence Minister Manohar Parrikar said on Saturday would be Rs 18,000-22,000 crore. Later on Saturday, he extended OROP to ex-servicemen who had taken pre-mature retirement. That is another Rs 6,000 crore, boosting this year’s overall OROP outlay to Rs 24,000-28,000 crore.

Factoring in the lower figure, OROP will raise actual defence spending to Rs 3,25,000 crore. Of this, personnel costs will be Rs 1,72,000 crore, or 53 per cent of defence expenditure.

This figure should alarm most governments, forcing generals, admirals and air marshals to think hard about cutting down manpower costs to leave a greater percentage for equipment modernisation. Two straightforward solutions present themselves. Either reduce the military’s overall numbers; or reduce the pension bill by hiring a much larger percentage of soldiers, sailors and airmen (hereafter soldiers) on “short service” contracts that bind them to serve 5-7 years in the military, and retire without a pension.

Theoretically at least, there is also the option of compulsory military service or national conscription. However, the defence ministry believes this “would go against the democratic ethos” of India. Responding to a parliamentary question on July 25, the defence minister ruled out conscription, saying: “In our democratic set up, people are free to choose their professions”; “Military training to all the youth of the country may also lead to militarisation of an entire nation”; “With our socio-political and economic conditions, it is highly undesirable, lest some of the unemployed youth trained in military skills join the ranks of the undesirable elements”; “there is no problem in getting adequate numbers of volunteer recruits” and, finally, training so many conscripts would involve “a big drain on limited resources of a developing country.”

Cutting costs

Major global militaries, most recently China’s People’s Liberation Army (PLA), but also the US, British and French militaries, are currently slashing numbers. This rests on the logic that, with modern weapon systems pulverising the enemy with firepower, fewer soldiers are needed to win battles; even as paying for fewer soldiers saves money to procure better weaponry and more firepower. Last week, Beijing announced it would downsize its 2.3 million-strong military by 300,000 soldiers. This after a reduction of 200,000 soldiers by President Jiang Zemin a decade ago, and an earlier cut of 500,000 soldiers in 1997.

India, inexplicably, is going in the opposite direction. The United Progressive Alliance (UPA) government sanctioned a new, 90,000-man mountain strike corps (MSC) for the Himalayan frontier, for which the cabinet cleared the expenditure of Rs 64,478 crore. In addition to this would be the recurring cost of salaries.

There were reports, later belied, that the National Democratic Alliance (NDA) government had cut the MSC to 35,000 troops just before Prime Minister Narendra Modi’s visit to Beijing last May. However, the NDA, unwilling to appear soft on China, quickly clarified that the MSC would be raised in full, even if over a longer period of time. In short, India’s military is set to grow bigger and manpower expenditure will only rise.

Analysts might argue that India’s overall defence budget would grow in tandem with the economy, and can absorb growing manpower costs. In fact, with the 7th Pay Commission already finalising its report, manpower costs would grow faster than overall defence spending. With the OROP award linking all pensions dynamically with rising salaries, the pension budget would grow too.

Alongside rising numbers, there is little progress on the second option of recruiting more soldiers and officers on 5-7 year “short service” contracts that do not entitle them to pensions. In exchange, the government would assist in “resettling” them in alternative employment at the end of their service.

New recruiters

Both the 5th and 6th Pay Commissions have proposed the 750,000-strong central armed police forces (CAPFs) --- including the Assam Rifles, Central Reserve Police Force, Border Security Force, Indo-Tibet Border Police, et al --- absorb military personnel who have completed seven years of service. This would save CAPF training costs and stiffen their capability, badly needed after weaknesses have been repeatedly laid bare by lightly armed Naxal guerrillas.

However, the Ministry of Home Affairs (MoHA) has steadfastly blocked this proposal. Parliament’s consultative committee on defence has listed out MoHA’s objections. These are: inducting soldiers who have served seven years would make the CAPFs older and “greyer”; the police function with a soft touch, while soldiers are trained killers; and laterally inducted army soldiers would bring along their service seniority, superseding direct recruits.

Partly because of these objections, the defence ministry has never implemented a “short service” scheme for persons below officer rank.

However, the officer cadre has, since 1963, had a “short service commission” (SSC) of 5-10 years, later extendable to 14 years (officers must serve 20 years to be eligible for pension; other ranks get pension after 15 years), but this scheme has never brought in enough officers to materially reduce the pension bill.

On reason is that the army, given its debilitating shortfall of about 10,000 officers, has been granting permanent commissions to a large percentage of SSC officers. According to figures the defence ministry submitted in parliament on July 21, 1,192 men and women were granted SSC in 2011, while just 207 left service. The figures for the following years are: 2012: commissioned 1,271, left service 252; in 2013: commissioned 1,242, left service 246; in 2014: commissioned 1,101, left service 160; and in 2015 (till July): commissioned 650, left service 147.

Only a major expansion of SSC officers would bring down the bill for officer pensions, while a shift to shorter, 5-7 year service tenures reduce pensions for other ranks. Even if such radical changes were implemented by a ministry and a military given to conservative thinking, the benefits would become evident only after years, when the new “short service tenure” soldiers start retiring.

For now, figures that the defence ministry has submitted in parliament show that some 50,000 serving soldiers will retire every year, swelling the ranks of the current 22.5 lakh ex-servicemen and 6 lakh widows who currently draw pension. The anticipated numbers of retirees for the five years starting 2015 are: 46,483; 49,410; 49,697; 48,392 and 47,846. 

21 comments:

jatinder singh said...

I also feel that the private sector especially the manufacturing sector should partner in this. A baseline of discipline hardwork and integrity is already available and specialised training will take very little especially as today the intake is genuine 12 th pass individual. Also sir why should HR be cheap especially if paying with their lives. A leaner meaner but well compensated force can be wonderful.

Anonymous said...

India's total expenditure is around 17,00,000 crores. Out of that 3,00,000 crores only goes towards directly under defense.If we add costs incurred for maintaining CRPF, BSF, CISF,SSB,ITBP,Police,ISRO, various agencies under Atomic energy this cost may balloon close to 5,00,000 crores. In other words we are spending nearly 1/3rd of our revenues only on defense and allied activities. This is a serious cause for concern, as these activities do not create wealth for the nation. Huge amount of money getting stuck in defense leaves little revenues for infrastructure and other nation building activities which lead to wealth and prosperity. If such populist trends continue, not only will our economy suffer adversely, but there will be increase in internal turmoil.
We have no option, but number of troops have to be brought down. We can easily do away with 7 Gorkha Regiments... in an independent India, why do we need foreigners to guard a nation with more than 1.3 billion? India pays several 1000 crores to Nepal annually only towards medical bills for ex servicemen residing in Nepal(this doesn't includes the ones who settle in India). Next, some states have more than one regiment.. they can be clubbed together. paramilitary forces like BSF, ITBP, SSB can be directly brought under the control of Indian Army.
Even after doing away with seven Gorkha Rgts, we have Assam Rgt, Dogra Rgt, Garhwal Rgt, JKLI, Ladakh Scouts, Naga Rgt, Kumaon Rgt, J&K Rgt, Sikkim Scouts, Arunachal Scouts apart from SSB, ITBP of paramilitary forces.So why do we need an additional Mountain Strike Corp when we already have so many regiments devoted to mountain warfare?? This move to raise additonal MSC was a kneejerk reaction to sudden Chinese troop movements by an incompetent defense minister and army chief who were busy fighting one another over date of birth.They've simply not factored in the existing strength and the cost to be incurred for raising the number of troops.
A jawan enters the service when he is 18 years old. Five years of service will mean that he will be a 23 years old when he "retires" from the armed forces. Such people are the ideal material for Police and CRPF, which today is doing the real fighting.
Finally, the Indian political parties need to get a better control over India's total expenditure. So far it looks like favoring big businesses and other political pressure groups which are further weakening India's economy. If this continues, separatist movements and attacks from external forces will grow to a point where they can overwhelm India's state machinery. India's reluctance for compulsory military training is an indication that so called "democracy" is a sham and we are kept together by the point of a gun. India's military, political and governance structure is a pointer to this fact.

Anonymous said...

late than never... self sustaining... armed forces... pension funds...

joydeep ghosh said...

@Ajai sir

if you ask me the best way to generate the humongous amount of cash needed to finance OROP or MSC is to brak Ordinance Factory Board into several companies and take them to stock market, that will generate massive cash to meet OROP MSC requirements

thanks

Joydeep Ghosh

Dr Vachaspati Mishra said...

A great article. Makes lot of sense to take to wider public platform for a decision to be taken at People's leve. Compulsort two years service for all young of India will make lot of sense.

Rajiv Narayanan said...

The tardy progress in modernisation, the stringent accountancy of the DPP, lack of performance audit of OFB,DPSUs and DRDO, appears to be one of the causes for the increasing boots/manpower. Further, the powers that be need to realise that border defence and border policing(guarding) are two different aspects and need different skill sets, ex Army personell for the former and police for the latter. This by itself is a separate subject!!
The day these aspects are resolved and clarity exists at the TOP, we can move towards a more modern Army, where force multipliers replace boots on ground (and not other force multipliers, as the current thinking appears to be)!?!?

Anonymous said...

Great article from statistics and contents point of view, but the solutions are totally wrong. Its unfair to cut-costs dealing with post retirement of our soldiers and officers who serve in harsh terrains and difficult conditions, most of the time life threatening. When we talk about expenditure, why don't we talk about cutting the expenses these IAS/IPS babus cause to the government? Why don't we point fingers to the retirement benefits of these babus?

In my opinion if e-governance, better policies and efficient work culture is brought to our rotten ministries, it will be far better solution to save money than cutting cost in terms of pension for a retired soldier who has give his/her life for country.

Nayan Pani said...

India spends 2.4% of its GDP on Defence. Please increase this to 3% of GDP. Surely with Two nuclear powers as its neighbours and a large coast line to defend, an increase of 0.6% can be justified. To put it in correct perspective have a look at countries spending more on their defence budget than India.

Oman, 11.8, Saudi Arabia, 10.8, South Sudan, 8.3, Libya, 8, United Arab Emirates, 5.7, Algeria, 5.5, Angola, 5.2, Israel, 5.2, Congo, Rep., 5, Azerbaijan, 4.8, Lebanon, 4.6, Russian Federation, 4.5, Armenia, 4.3, Iraq, 4.3, Bahrain, 4.2, Namibia, 4.1, Guinea, 3.8, Morocco, 3.8, Myanmar, 3.7, Colombia, 3.5, Jordan, 3.5, United States, 3.5, Kyrgyz Republic, 3.4, Pakistan, 3.4, Singapore, 3.2, Brunei Darussalam, 3.1, Ukraine, 3.1, Mauritania, 2.9, Ecuador, 2.7, Lithuania, 2.7, Zimbabwe, 2.7, Korea, Rep., 2.6, Sri Lanka, 2.5,

Ganesh B said...

Good story. But let me play devil's advocate here for one minute.

1. India does not have neighbors like countries in Western Europe. Show me one more border outside of the countries in Africa where there is constant cross-border fire.

2. A large force provides a lot of employment to people especially from rural areas. Unless India's rural areas and villages start making progress in leaps and bounds or private sectors provide tons of jobs these numbers will continue to be high.

anonymous said...

The article makes a lot of sense but I'm a firm believer in the fact that considering the inherent love that exists between all our communities and sub communities, the only thing that holds this country together is our military. The Brits divided us into big states after giving independence, but we Indians have found andhra and telengana, UP and uttarakhand, Bihar and Jharkhand, MP and chhatisgarh in the last couple of decades. Our politicians haven't left any stone unturned to divide and rule. There is caste, there is quotas, reservations to name a few. We as a nation have to realise that if we leave this country to these politicians and the politicised paramilitary and police, very soon we will become like Africa. A divided poor sub continent after every state wanting independence for worthless reasons. The only detterent for foreign powers in abetting this is the fact that we have a strong Army, Navy and air force. Paramilitary forces don't win wars, they never have, they never will. And a lot of us feel that spending money on the armed forces is a waste, but please remember that it is akin to being a rich businessman living in a dangerous locality and keeping security guards. You have to keep the thieves out. The richer you become, the more security guards you need. Money spent on military is an investment which only pays dividends.
A strong military gives you the security to do business safely, it gets investment. No one wants to invest in a country which isn't safe. As a matter of fact Indian defence spending isn't the maximum in the world. Considering its population and the delightful neighbours. Do you think China could do the border incursions if we had adequate development on our side of the border.

Coming to pensions..... And salaries of soldiers..... Please remember that you cannot pay anyone enough for his life. There is no price for the life of a fallen soldier. Ask his wife, his children and his parents.....you cannot pay them enough!!!

Anonymous said...

Their are two threats to India's defence budget. 1) exponential growth in cost of imported arms. 2) exponential growth in pensions budget. The only solution is to guarantee all ORs jobs in other government sectors. Pensions must start from after 60 as in many countries.

Anonymous said...

Huge defense expenditure destroyed USSR, huge pension bill bankrupted GM and Ford. We need to be careful that we do not fall in the same trap. Our massive defense budget is one of the major sources of corruption and India's poverty. We need to trim our defense budget as per needs of the country and not to chase some megalomaniac dream.

Anonymous said...

I have been following your blog since its inception and found it to be extremely informative. I may not agree with all your articles but there is no doubt that your content is original and not 'recycled'.
I completely agree with all that you have written in this article. While the PLA, since the eighties, has been progressively moving away from being a 'peoples' army to a leaner force, we have refused to change our thinking. One reason could be the continuous deployment of our forces for internal counter-insurgency duties which is one task that does require boots on ground.
Please continue the good work. Thank you.

Anonymous said...

Ajay,

Such loaded and prejudiced suggestions for the defence of a country which has more than half of the borders as disputed in terms of technology crap is being just theoretical. Your argument verges on the suggestion that pay US and Russia for the defence of India (technology) and send home the poor soldiers to die in penury. Get me a border which is fully undisputed , recognised and demarcated like that of China or USA or like we have with Bangladesh and I will reduce The Army's strength to half.

And mind you that is not the job of the soldiers but of diplomats and politicians. They deploy such a large number of soldiers to get over the dilemma of "disputed" and "threatened" borders.

Why are you after that MSC - that is a requirement or do you want the fourth strike corps filled with tanks?

Mama Tsopiano said...

Truckload of bull crap. You can't judge intangible sacrifices with tangible perks. The Army is not selling cars or consumables. Don't reduce their service to Mathematics. They are not looking to make a quick buck. Just a decent living. Modi claims that the OROP has been implemented at the expense of the poor. Oh well. Bullcrap again.

Anonymous said...

Hahahh super like

koiBandhGayaGhungroo said...

Kudos to Anon for reminding “Such loaded and prejudiced suggestions for the defence of a country which has more than half of the borders as disputed in terms of technology crap is being just theoretical. Your argument verges on the suggestion that pay US and Russia for the defence of India (technology) and send home the poor soldiers to die in penury. Get me a border which is fully undisputed , recognised and demarcated like that of China or USA or like we have with Bangladesh and I will reduce The Army's strength to half.”
“And mind you that is not the job of the soldiers but of diplomats and politicians. They deploy such a large number of soldiers to get over the dilemma of "disputed" and "threatened" borders.”
The problem remains that in the likely event of a limited war fought in WMD context, given India’s declared No First Use Policy, and stalemate obtained by Pakistan’s declared intention of using tactical nukes renders armoured divisions useless and repeat of khemkaran obsolete. Factor in short range missile proliferation esp Hatf series and your paradigm of deep armoured thrusts with Bhishma and T-90’s and IFV is dead in its tracks.
Indian doctrines ( Cold start ?) continue to remain uninformed by RMA and Networking Centric warfare. The focus is still on tanks, ifv and helicopters. The concept remains mired in OMG developed by soviets as a solution for European theatre in 80’s or worse in 65’.
“Towards a Doctrine of swarming” (Current military applications of swarming combine the use of swarms: large numbers of relatively small agents or weapons, with synchronized actions, such that the swarm, pulse etc reacts faster than its opponent and defeats it. It uses hugging the belt and other strategies to reduce dependence on offsite fire and logistics support.) is admittedly an untested theory and while US is still trying it out, our refusal to consider it is perplexing. We are not a first world power. Just imagine the bang for the bucks. Of course you can’t have cantankerous trucks the preferred mode for troop transportation ruling roost. When your army still moves on this behemoths with a huge and high profile, rcs to invest i n IFV’s is planning for a war decades in future. I am a civilian and not a professional but even i know that unless the military threat of solution for nuclear stalemate is real Pakistan will not behave.
And hence my accusation against a professional like you – you write pieces disconnected with each other whether it be recent developments like dg level talks stalemate, ufa failure – the pain of our faujis is real and now and yet your leisurely pieces are busy developing a first world army. Pls develop a third world solution that will work in 5 yrs time. I thought i spotted a pattern in F-16’s/ 18’s articulation but doing 6 c 130 Hercules, ifv, 45000 tonne displacement carrier based cbg stumps me now and then. It does not add to doctrinal clarity. Much as i love your attempts to focus on costs and recommend SSC as a solution the situationally aware soldier is unlikely to be a 12th pass 5 yr term soldier and a science graduate is morally too waylaid to bite professionally onerous task of being a soldier if he has no future beyond 5 yrs.

Anonymous said...

@KoibandhGaya....

You are contradicting yourself. What role will a peasant army play in a hitech "swarm" environment which will be a mix of satellite navigation, GPS, precision guidance, deadly accurate smart weapons systems, artificial intelligence, netcentric warfare and more?? Don't you think today's Indian Army is organized like a colonial army? The swarm oriented combat scenario that you've described is not a "3rd world thing" but something which is beyond the grasp of even many "1st world nations". The solution will have to be "SMART" to counter such threats. For which, we need to use our limited resources very judiciously. A huge standing army of semi literates with concomitant massive salary, pension, medical and ration bill stands in the way of building a lean, mean and smart army.This was amply demonstrated in Kargil war where our troops failed to take on a well equipped deeply entrenched enemy. They were dislodged by Israeli laser guided bombs dropped from French Mirages.If you read our history, we always were defeated by numerically smaller but technologically superior foes... from Babur, East India Company and beyond.
In today's scenario, soldiers have to be graduates or at least 12th pass with decent grades in order to navigate the hitech combat environment. With proper salaries and perks we can get the right recruits in a nation of 1.3 billion.

Anonymous said...

@Ajay

Can you throw some light on Govt's proposed DPP policy?

Thanx.

koiBandhGayaGhungroo said...

@anon from sept 13th,
my point is simple basic soldiering requires anywhere between 18 months to 2 years.
beyond it the skills a situationally aware soldier (not necessarily "swarm oriented" swarm is just one role) would require, entails further training. so by the time you can call on her/ his skills they would be packing their bags, orienting for the civil life beyond. in an "ordinance challenged" army you would just have to train harder.
so I am not against a science graduate, I am not arguing with proper salaries you can't find the right recruits, I am just arguing for a professional soldier and i think you can't whittle it down from 15 yrs.

every holed fidayeen takes up lives of at least as many peasant soldier who but for poverty should not have been in the business of soldiering and i am not talking about those killed in surprise attacks. these lives are lost in cordon and kill ops. these peasant soldiers have not learnt the basic skill of keeping low profile and uses of different modes of firing - probing fire suppressive fire etc. they cant distinguish between weapons of different caliber. so they have no idea if a tree trunk or such cover, patka or strips of material that goes for body armor is adequate. they are not trained to fire around corner, over the edge. smoke and stun grenades are alien to their toolkit. officers suffer from group think and having learnt all the policies written by “higherups” have lost the courage to order high explosives (mortars rpg and such) in civilian areas. Last but not the least they have not learnt, that in such situations they have the luxury of wasting ammunition and time. (should a soldier much less an officer be bothered with facts that firing is on for three days). Your squads are large and have low weapons mix and zilch communication. Squad tactics need revision. Train a soldier to high levels of expertise and you would be no longer willing to lose him to fidayeen with a basic camp training. having established that if you don't want to throw cheap peasant lives at the cross- border low intensity conflict you have to solve the pak challenge look at it from a different perspective.
If you want to withdraw army from counter insurgency operations and get on with soldiering and have a time table for it, what do you need ? you guessed it, a solution for pak challenge. (So for a while you need both rr formations and ghatak formations.)
Diplomacy wont get pak to behave. They have fantastic agility to regress. Under pressure they accept “kashmir as a bilateral agenda” which regresses and other interested nations (suppliers of defence equipment ) come with supporting statements. The threat to army “north of border” sitting with nuclear shield and such needs to become real for them to stop using cross border terorism as legitimate tool. I am sorry but your short term soldier is not going to be a solution to this problem.
Unfortunately your national security apparatus is lax and not coordinated so you have them throw money at every problem and that suits everyone and thats the catch we dont have enough money. 15 chinooks and 22 apache buys you a statement from kerry on 26/11. Pentagon knows it wont solve any of your problems so is happy to supply them. Nation goes Modi Modi. And peasant soldier keeps getting killed. The options for poor are limited – sucide, death by malnutrition or the twisted pride of dying the death of a soldier.

RAMACHANDRAN KK said...

There are a lot of civilians working in Ordnance Factories ordinance depots. If the retiring PBORs are absorbed in these establishment till the age of 60 years the problems can be solved to a great extend, After all all equipment manufactured bu ordnance factories and spares and equipment stored in ordinance depots are supposed to be used only by the armed forces and they are trained and know maintenance of equipment better than a civilian recruited and trained for repair and maintenance of the new equipment. If problem arise to absorb PBORs in these civil establishment a parallel organisation can be established and the work divided between these establishments to study the usefulness. At present the trained manpower are wasted since their expertise in the weapon and military are of no use in the public manufacturing units