Army chief admits the flow of funds, would naturally rest on economic growth
By Ajai Shukla
Business Standard, 14th Jan 14
Chief of Army Staff (COAS) General Bikram Singh says the government has assured funding for a massive, new mountain strike corps that was raised on January 1 to add muscle to India’s defence of its northern border with China. The flow of funds, he admitted, would naturally rest on economic growth.
Addressing a press conference in New Delhi on Monday, the army chief revealed the new strike corps was already taking shape. On December 1, 2013, twenty-two units began raisings at regimental centres across the country. On January 1, the new corps headquarters, numbered 17 Corps, was born in Ranchi. The first of its divisions, 59 Division, was raised at Panagarh the same day. Simultaneously, two brigades began taking shape in the northern and eastern sectors.
A Business Standard analysis of the fiscal effects of adding 80,000 more troops to the army existing strength of 12,00,000 soldiers (‘New strike corps for China border a fiscal minefield’, January 7, 2014) had underlined that the army’s revenue expenditure would be bloated even beyond its already high 82 per cent, and load additional capital expenses onto an already stressed capital budget.
The analysis highlighted that this year’s Rs 73,444 core capital allocation to the three services for 2013-14 had been mostly spent even before it was allocated. Of this 96 per cent was earmarked for instalments on purchases made during preceding years, while just Rs 2,955 crore – a miniscule four per cent – was available for new acquisitions. Only a sharp rise in defence spending would provide the Rs 8,000 crore needed annually for the new corps.
Gen Bikram Singh said the ministry of defence had provided him “hundred per cent assurance” that the money would be forthcoming.
“When the proposal was brought to the CCS (the apex cabinet committee on security), there was a discussion on the financial implications. The honourable raksha mantri (defence minister) has assured me that all financial support will be given. I am very hopeful that the money will come,” said the army chief.
Injecting a note of realism, General Singh added, “Every time, I am assured about budgetary support, but let me remind you gentlemen, it is all contingent upon the fiscal situation within the country.”
Justifying the addition of 80,000 more soldiers to an army that already spends two third of its revenue budget on salaries, the army chief said, “We have got long borders; disputed borders; porous borders; hostile borders. You require boots on the ground… so the revenue side would always be heavy.”
What remains unclear is: With 80,000 more salaries raising revenue expenditure significantly, and with Rs 8,000 crore being required each year for the new corps, will the next government be forced to raise defence spending, or will the air force and navy be forced to curtail their modernisation? Both those services spend two-third of their total budget on modernisation, compared to just 18 per cent that the manpower-heavy army spends.
This year, at least, the army’s capital expenditure on new weaponry has gathered steam. Allocated just Rs 494 crore for new contracts (alongside the air force’s Rs 2,010 crore and the navy’s Rs 443 crore), General Singh said the army would conclude 40 new contracts this year, involving a total value of Rs 24,000 crore, and a cash outflow this year of Rs 3,000-3,500 crore.
According to sources, the army could spend six-seven times its allocation for new contracts this year because its “committed liabilities” of Rs 3,727 crore were less than what had been allocated in the budget. The failure to conclude several large contracts last year had reduced this year’s “committed liabilities”, allowing more to be spent on new purchases.
Critics of the new mountain strike corps argue that the defence of the northern border would be better served by strengthening existing formations, with the purchase of equipment like 155 millimetre ultra-light howitzers and towed guns, and air support. Even more important is the building of a good road network, that would allow existing formations deployed on the border to move swiftly in response to a developing threat, rather than being tied down to one spot.