By Ajai Shukla
Business Standard, 14th March 18
Expressing grave concern at the “insufficient” allocation of funds for new weaponry, a top army general has told Parliament’s Standing Committee on Defence (hereafter “the Committee”) that the budget announced on February 1 “has dashed our hopes”.
A draft report by the Committee on Defence that Business Standard has reviewed notes that the army has been allocated just Rs 26,816 crore ($4.14 billion) for equipment modernisation against the Rs 44,573 crore ($6.88 billion) it had projected. That is barely 60 per cent of its request.
The navy’s and air force’s capital budget requests were slashed even more drastically. Against Rs 35,695 crore ($5.5 billion) the navy projected, it has been allocated Rs 20,004 crore ($3.1 billion), just 56 per cent of its requirement. The worst hit is the air force, which was allocated Rs 35,770 crore ($5.52 billion) against its projection of Rs 77,695 crore ($12 billion), barely 45 per cent of its needs.
Services capital budget: requests versus demands
(Source: Draft report of Parliament Standing Committee on Defence)
The defence committee is chaired by Major General BC Khanduri (Retired) and includes 21 Lok Sabha and eight Rajya Sabha members. These include heavyweights like former prime minister HD Devegowda, Murli Manohar Joshi, Kalraj Mishra, Ambika Soni and Subramanian Swamy.
Deposing before them, the army’s vice chief, Lieutenant General Sarath Chand, said “the marginal increase in BE (budgetary estimates) barely accounts for inflation and does not even cater for the taxes.” Chand was apparently referring to the new Goods and Services Tax (GST), which has placed an added load on the defence budget.
Typically, the three services submit their projections in the third quarter of each year, for which they add up “committed liabilities” (annual instalments due on purchases previously made) and “new schemes”, for which the calculate the first instalment on new acquisitions likely in the coming year.
But Chand deposed before the Committee that the army’s capital allocation this year “is insufficient even to cater for committed payment of Rs 29,033 crore ($4.48 billion) for 125 on-going schemes, emergency procurements, 10(I) (or the urgent procurement of ammunition for 10 days of intense war) and other DGOF (director general ordnance factory) requirements.”
Further, Chand stated: “Committed liabilities of 2017 which will also get passed on to 2018 will further accentuate the situation… [and] will hardly leave any funds for new schemes in 2018-19.”
This is of serious concern, he said, given the state of army equipment. “Typically, any modern Armed Force (sic) should have one-third of forces, one-third of its equipment in the vintage category, one-third in the current category and one-third in the state of the art category. As far as we are concerned, the state today is 68 per cent of our equipment is in the vintage category, with just about 24 per cent in the current, and eight per cent in the state of the art category”, Chand told the Committee.
The army’s vice chief stated that, leave alone fresh capital acquisition, the prime minister’s vision of “Make in India”, which focused on greater indigenisation, would be badly affected. “We in the army have identified as many as 25 projects for Make in India. However, there is not adequate Budget to support this. As a result of which, many of these may end up foreclosed”, said Chand.
High value and prestigious projects to indigenously develop a Future Ready Combat Vehicle (FRCV) and a Future Infantry Combat Vehicle (FICV) were also likely to be scuppered by a lack of funds. Chand said “with the kind of Budget that has been allocated, this may get delayed by a few years. I am not sure what is going to be their future.”
The pared down capital allocations this year are not a one-off case. A summary of previous years’ projections and actual allocations illustrates that this has been the pattern of the past as well.
As in previous years, the Committee has called on the government to remedy the situation. The draft report notes: “The Committee opine that keeping in view the likely cost escalation due to inflation, [the increase over last year’s budget] is quite minimal to meet requirements of Capital acquisition and other works planned for 2018-19. Therefore, the Committee would like the Ministry of Defence to strongly put its case before the Ministry of Finance for adequate allocation of funds, commensurate with the requirement of Modernisation and acquisition plans for 2018-19 (sic).”