Monday, 23 May 2016

Mr Modi’s defence report card

By Ajai Shukla
Business Standard, 24th May 16

On Thursday, this government will mark its second anniversary in power. Even before Chief Minister Narendra Modi became Prime Minister Modi, serving and retired soldiers, sailors and airmen hoped that, unlike the United Progressive Alliance (UPA), the Bharatiya Janata Party (BJP) would nurture a long neglected military. How successfully has the National Democratic Alliance (NDA) government met those expectations?

In electioneering, Mr Modi talked up a muscular, populist alternative to Manmohan Singh’s widely ridiculed milquetoast image. [In the 1940s, HT Webster created the comic strip character, Caspar Milquetoast, describing him as “the man who speaks softly and gets hit with a big stick.”] On September 15, 2013, two days after being anointed the BJP’s prime ministerial candidate, Mr Modi promised a huge gathering of military veterans in Rewari he would give the military its due --- both in money and attention. Declared the future PM: “My friends, the problem is not on the border, the problem is in Delhi… and, thus, we will have to find its solution also in Delhi! Until we do not have an efficient and patriotic government in Delhi, it does not matter how capable our military is, or how modern our equipment.”

In April, just days before voting, Mr Modi released the BJP’s election manifesto, which included, in unprecedented detail, pledges to rewrite defence policy, restructure procurement, modernize weaponry, and make India a defence manufacturing hub. Yet, the soaring expectations of the generals, admirals and air marshals who were jumping onto the BJP bandwagon were clearly unrealistic. Reading between the lines, the manifesto clearly prioritised economic development: “Comprehensive national security is not just about borders, but in its broad terms includes military security; economic security; cyber security; energy, food and water and health security; and social cohesion and harmony. To effectively address the issues of national security, we need to address the issues of - human resources, science and technology, system of governance and money.”

Given that, the real decline in defence allocations should have been expected. From about 1.8 per cent of gross domestic product (GDP) in the UPA’s last two Budgets, defence allocations declined to 1.73 per cent in Modi’s first two Budgets; and just 1.65 per cent of GDP this year. To dress this up, Finance Minister Arun Jaitley changed the basis of calculation this year, adding into the defence allocations the expenditure on the “pensions” and “defence ministry” heads, which had never previously been counted as a part of the defence budget. This is not to suggest subterfuge; pensions and ministry staff expenditures legitimately belong to the defence budget. But doing that diverted attention from this year’s reduced allocations and made the defence budget look fatter. By the previous methodology, this year’s allocations would have been Rs 2,49,099 crore ($37.18 billion). Using the new calculation, defence allocations rose to Rs 3,40,922 crore ($51 billion). Even so, at 2.26 per cent of GDP, this remains well short of the recommended allocation of 3 per cent of GDP that defence planners say is needed over a sustained period to modernise India’s huge inventories of obsolescent weaponry. Furthermore, even more so than preceding governments, the NDA is failing to spend its allocations. On March 31, billions of unspent dollars were returned to the treasury.

In fact, Mr Modi’s money problem is less one of insufficient allocations than of poor expenditure priorities. Using the new basis of calculation, three-quarters of this year’s defence budget is for “revenue expenditure” --- running expenses like salaries, pensions, housing, equipment maintenance, fuel, training, etc. A mere quarter is for “capital expenditure”, or modernising the army with new weaponry and kit. Despite India’s cheap manpower, 55 per cent of the budget goes towards the payroll. This ratio is being skewed further with the One Rank, One Pension (OROP) scheme bloating the pension bill, and the 7th Central Pay Commission recommending 15 per cent salaries rises. Without higher defence allocations, there will be even less for capital expenditure. Mr Modi seems aware of this conundrum, having warned his military commanders that growing numbers would adversely affect modernisation. Yet, there is no decisive move to trim the flab.

Meanwhile, equipment acquisition proceeds randomly. Like with the UPA government, contracts for new weaponry are pursued not on the basis of how urgently the item is needed, but in the leisurely order in which proposals clear the endless obstacle course of ministry procedure. Every official knows the military’s most critical needs --- artillery and air defence guns for the army; torpedoes, sonars and air defence missiles for the navy; and mid-air refuelling aircraft and strike aircraft for the air force, to name a few. There exists a fast-track procedure for urgent purchases. Even so, glaring operational voids remain, providing reassurance to our foes.

Similarly, the military’s operational capability remains hamstrung by the weakness of tri-service operational command and planning. The defence minister has repeatedly promised to address this issue; the PM himself told the military’s top commanders on December 15 that: “Jointness at the top is a need that is long overdue. We also need reforms in senior defence management... This is an area of priority for me.” Yet, action: zero.

Admittedly, the defence ministry got off the blocks late, after languishing for almost six months under the additional charge of the finance minister --- something Mr Modi has never explained. After Manohar Parrikar’s appointment in mid-November 2014, he has tried to reform the way his ministry does business. Despite opposition from his conservative bureaucrats, Mr Parrikar has pushed through badly needed measures to partly level the playing field between the public and private sectors; and he is popular with private sector industrialists for his consultative approach. However, he has promised more than delivered. A new defence procurement procedure (DPP-2016) has been only partly released. The ministry continues to grapple with an ill-conceived initiative to replace the public sector monopoly with a private sector one, dominated by a few “strategic partners”. A pragmatic “blacklisting policy” remains blocked. Despite Mr Parrikar’s laudable backing of indigenous development programmes, and the policy prioritisation of “Made in India” (designing and developing platforms in the country) over “Make in India” (manufacturing in India to foreign blueprints), few such projects have been initiated so far. The drive to reform defence policy and revitalize operational readiness is far from yielding results.


Suren Singh Sahni said...

Great Analysis

Alok Asthana said...

Defence is a topic subjected to least public scrutiny in India. That being so, Modi won't do anything about it. He plays for the gallery only. The gallery can be made 'hot' if our officers speak up more often. Which, too, won't happen. We'll keep getting assurances from serving and ex-chiefs that, 'The nation need not worry. We will fight with what we have'.

Anonymous said...

Two biggest fiascos of the stupendous defence policy of the Modi govt.:
1. US has done well in balancing its ties closely with India...but not alienating Pakistan;
The success of Manmohan singh is missing. Today India's position has that been of alienating Russia. Partially Russians are to be blamed because of Putin's so called show of China favoritism,
2. The missile program in all its category suffered very it Agni, K4, Aakash etc. It is the worst performance of Indias missile programme under any govt...add to this a rediculous treatment in ousting Avinash Chander. Best guess is that this was all done to please US bosses by Namo!

Hope sense prevails and Namo who cannot think on his own...has more able thinkers with him than...Jaitley & Parrikar!

Anonymous said...

New DPP is just a means to import foreign arms via few Pvt Cos who will monopolize arms procurement and manufacturing in the name of "strategic partnership".
This baniya sarkar is far worse than UPA. At least Antony was honest. This Govt seems to be working solely for Reliance, Tatas and few other big business houses whose rise to wealth and power is solely due to patronage from those who rule New Delhi.

Anonymous said...

Ignoring the procurements and orders, simplification of DPP, greater push for indigenisation, constitution of committee to right size the army, induction of Tejas, ships in navy etc
Give credit where due and criticize whats wrong..... Don't let your bias be out in open

Samar said...

Dear Mr. Shukla,
I have been a regular follower of your articles and I appreciate them for their sincerity. I have a question, Did you ever bother to check India's economic condition before giving this opinion about purchases and OROP etc?

Now Def ministry has planned for reduction in personnel numbers to reduce the revenue expenditure.Hopefully, the Def ministry solves the other issues soon.

Anonymous said...

Excellent article. Good to see this sort of candid assessment rather than the staple diet of propaganda garbage we are fed by BJP lackeys on various websites about Mr. Modi's great successes with defence preparedness. More hot air than real achievement so far.

Anonymous said...

Col. Shukla

All said and done, your own article ( written earlier) highlights the problems with money into the defense budget and the govt seems to be set to implement the same recommendations that you have so passionately pushed to previous govt's but no one even listened, so you were not tired then, now I understand action is yet to come, the intent and planning is present with the present govt, so why are you all praise for the previous govt, who just didn't care and so much for Mr. Antony's Halo, which you had rightly put across then. I'm not calling you are biased, but missing the same yardstick that you used before seems to have changed. That concerns me, otherwise as always, well placed analysis in terms of numbers and concerns, we need to do much more, wonder the obstacles to the govt in this direction go off and we see the real progress that is intended.


Anonymous said...

Shouldn't it be Prime Minister Modi and not Mr Modi? Sad to see an armymen getting salutation wrong or perhaps forgetting that salutations are for the office and not for the person.

Anonymous said...

This is how you miss the forest successfully and get the tree.

If Modi has failed in something then it is in keeping US from infiltrating our armed forces. Something that people like the writer have actually enabled by their acts of omission and commission in several ways.

1) The armed forces salivation for foreign stuff is being successfully curtailed with several cancellations or deflections.
2) The domestic weapons manufacturing is up. MOD is even talking about weapons exports which BTW are up 100% already. Record number and value of contracts for DPSUs.
3) Made and Designed in India is being introduced.
4) R&D budget once bumped up in the interim budget has been kept up.
5) The LCA which was near dead has gotten a new life.
6) GTRE/Kaveri which was actually dead has been refunded.
7) Subs force, which was getting sunk for no reason and going without batteries, is seeing a new life.
8) Critical War reserves are made up fully.
9) Su-30MKI which had been nearly scuttled hit 60% availability rate a few months back (agreement for guaranteed 75% availability is being put in place).
10) Raid against Chinese supported terrorists in Myanmar.
11) Agni-5 has been a dampener but K-4 tests, back to back, has more than saved the situation on ballistics front.
12) OROP has been introduced successfully.
13) Corrupt officers are now sufficiently warned/threatened.
14) More than half of the Kashmir Package of Rs. 80,000 crore is for roads and related infrastructure in that region, the biggest beneficiary being the Indian Armed forces and India's strategic heft in that crucial region. That has been conveniently left out by the writer.
15) Chabahar is up and running.
16) Military exercises (solo or with partners) are up. In fact the military that used to extract money for exercises has been forced to manage its finances better by forcing them to cough up the cash.
17) Armed forces under the MOD has successfully managed the Operation Maitri in Nepal and water supply to the Mauritius. Again helps in strategic reach. Sri Lankan elections are a plus point. Compare that to the Maldives mess from the previous times.

In the maintenance mode too Modi-Parrikar team is successful:
Ship construction is moving. LCA Mk-2 is moving. FGFA is moving. Sub construction is moving. The Kashmir package

Sorry boss but the write up is meant to appease the Congress supporters only.

Anonymous said...

Mr Shukla you are a clever fellow. I notice to avoid the tag of being a UPA stooge which in reality you are, you cleverly start every negative comment with 'Like the UPA govt....' ostensibly trying to show yourself as a paragon of neutrality and objectivity.

The fact is that indiginisation has received a tremendous boost. Therefore a cut in budget reflects lesser spending for more indigenous muscle. You have cleverly overlooked this aspect. Do you think the RM if head gone ahead with the ridiculous Rafale deal he would have done a great job?? The budget allocations would be much more and stooges of foreign companies would have had a field day. The critical policies such as going one rung down from complete bought out items to true transfer of technology to make critical systems in country has been initiated. This will save the country lakhs of crores of FE in the long run and India is now on the path of being a true manufacturer of defence equipment. Corrupt UPA with a grovelling 'yes man' for a RM had brought so much rot in the system that Parikar deserves a Bharat Ratna for removing the cobwebs with the best DPP ever. Sincere honest and good foreign companies from especially the USA are now eager to come to the Indian market. They shudder to recount their experiences of corruption in the previous set up both within and without the services. The changes that have been brought out are subtle and not glaringly obvious. Only the knowledgeble and honest assessor will appreciate the selfless work of the RM. Jai Hind.

Anonymous said...

OROP is a good idea and ex servicemen deserve it. The implementation however has been terrible. The poor Jawan who retired 25 years ago richly deserves OROP. All ORs must have been given automatic absorption in all non military security services. Pensions with OROP scale should start from the age of 58. Officers who take premature retirement and leave service should have been entitled to OROP scale pension from the age of superannuation for that rank. All these measure would have saved the government a lot of extra revenue expenditure and increased the capital budget. These suggestions are not new ridiculous hallucinations of a demented person. These are the practices of the UK armed forces. If we copy them in other issues we may copy them in this as well.

Vijay said...

Why did not you EVER write a DETAILED article about AK Antony's
DELIBERATE Indecisions

The mess created by Antony is still being cleared

rsb said...

Oh dear... col shukla, again one of your very biased articles. you cant see.. that our manmohan and pappu govt had left the forces languishing without adequate weaponry for months.

Mr clean anthony wouldnt clear even one purchase orderfor fear of scam. what use is it to the country if mr clean doesnt work!!!!..

i guess, an unbiased view of politics is too much to expect off you.

Alok Asthana said...

It would be a good idea to have a similar report card when service Chiefs change. Or, are we confirming that anything substantial in the services is out of the reach of service chiefs, nestled in the lap of defence ministry? Does the Chief lead only in the way a mast leads a sailing ship?

Parthasarathi said...

Sir,Your analysis is statistically correct. In my opinion the main issues are,
1) There is no doubt some attempt to help indigenous defence industries. But results are to be seen.
2) Fund crunch. We are still not ordering another three Scorpene subs. Hull department (Submarine) of Mazagaon dock is almost idle. Gigs and tools are getting rusted. After few years workers will loose their experience or may be transferred to other department. India will loose valuable experience to built submarine hull. MOD. is clueless. At-least order for one sub should be placed to keep the stone rolling.
3) Till no plan to replace INSAS. rifle.
4) Tejas is a total mess. HAL is as incompetent as ever. No effort to change top management.
6) DRDO. is also in a total mess. Their recruitment procedure is lacklustre. Why they can't go to IITs or NITs. or good universities Anna or Jadavpur to recruit young patriotic talents ?? Just recently they are asking GATE qualified engineers to apply. Previously it was only thru. an internal exam.
7) Two years back MOD. was started with a bang anow it is fizzling out. There is all talk no visible results anywhere.
Best regards,

Anonymous said...

If so much depends on the prime minister & defence minister of the day, why do we have so many "senior" civilian & uniformed officers in Delhi. Replace them with clerks .
It means these Guys know minister come and go, keep stalling , "yes minister " types.
Please carry an article on what are defence secretaries and chief of staff accountable for ?

Please respect the elected representatives, call him Prime Minister Modi. Do you ever write VK Singh, or do you write Gen VK singh.
You even call yourself Col Shukla not Ajai shukal. Come on grow up

Anonymous said...

nice article but there are many other achievements which have been missed or not elaborated, see below
1.) Exports are on the rise, this has been a weak area and we are on the verge of clinching big orders globally
2.) LCA tejas was neglected in the past and now we have a RM who personally got involved and ensured that IAF buys 100 more, this was impossible in UPA times
3.) domestic production increased 20% which is unprecedented, means our OFB, DPSU's are churning out more which means imports will come down
4.) no corruption, something which was rampant in UPA
5.) OROP, some people will never be happy but at least they fulfilled it to the best extent
6.) PM and RM speak more often and more clearly then ever before on defence matters, again unsual but very significant
7.) new CDS on the anvil, need to give them another yeay
8.) decision on LEMOA, again UPA did nothing and this govt closed it or on the verge of closure
9) Rafale closure in less than 18 months is a new record
10) FGFA back on track again only possible with RM intervention
11) purchanse based on priority, good that several deals pushed back to make way for urgent requirements
12) more deployments of IN and IAF aborad
13) RM gives several interviews, pity that journalists ask ridiculous questions but again this was not the case before.
wait for 3 years and I think all major defence deals will be closed.