Addressing passing out cadets of the Indian Military Academy in December 2006, then President Abdul Kalam stated, “National security is born out of two important components. One is the economic growth and prosperity; second one is the capability to defend the nation against all types of threats.” The economy provides funds for national security while national security provides an environment for national growth. There is a strong corelation between the two. Simultaneously, there has to be a balance between development and security.

Addressing a seminar in February 2018, General Bipin Rawat stated, “Economic rise takes place if the country is secure. We have to build and develop confidence amongst investors that the nation’s borders are secure and internal security situations being under control for which there is a requirement for budget for the defence forces. Economic development and military modernisation must go hand-in-hand.” He also emphasized the role of armed forces in building the economy. He mentioned that 35-37 per cent of the annual budget given to the forces contributes towards nation building including in developing infrastructure.

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There is no doubt that budget allocations will never be sufficient or equal to demands being projected by the forces. However, they need to be realistic. In the budget this year, defence was allocated Rs 5.94 lakh crore, which was under 2 per cent of the GDP and just over 13 per cent of government spending. It is low if suggestions of multiple parliamentary panels are considered. They have repeatedly demanded 2.5 per cent of the GDP. This allocation includes Rs 1.38 lakh crore for pensions as compared to Rs 1.19 lakh crore last year. The increase is due to OROP announced recently.

The revenue share of the budget, earmarked for maintenance and sustenance of forces has witnessed the largest hike rising to Rs 90,000 crore from just under Rs 65,000 crore last year. The defence ministry stated that this was to close critical gaps in combat capabilities and meet demands of ammunition, sustenance of assets etc. This part of the budget would enable upgrading existing capabilities, create essential reserves as also develop infrastructure for troops in regions where Chinese salami slicing threats are more likely.

The defence capital outlay was increased to Rs 1.72 lakh crore, which is just about Rs 10 lakh crore over last year, an increase of approximately 16 per cent. Of this the air force obtained the highest share of Rs 0.57 lakh crore, a marginal increase of 3.6 per cent from last year, the army Rs 0.37 lakh crore, an increase of 15.5 per cent and the navy Rs 0.52 lakh crore, an increase of 10.5 per cent. There is no mention of allocation to joint organizations including cyber, space, strategic forces and special forces commands, which would flow from individual service allocations.

Capital allocations were way below what the forces had demanded, though this was not unexpected considering economic hurdles post the Ukraine conflict. Further this budget was an election year budget intending to grant sops. Overall the government spending was at a record high and hence capital allocation should have proportionately risen.

Currently there are multiple ongoing projects of the forces which may be impacted by reduced allocations. The navy seeks approval for a third aircraft carrier, additional submarines and aircraft for its second aircraft carrier. The air force has committed liabilities including for its newly inducted Rafale and the S 400 as also seeks to finalize its choice of additional fighters to replace its aging fleet and enhance its squadron strengths. The army intends to boost its artillery firepower and induct drones to support troops deployed along un-demarcated borders.

A major increase has been in allocation to the Border Roads Organization, which has enhanced connectivity along the LAC. Last year its allocation of Rs 3500 crore was 40 per cent higher than the previous year, whereas this year it was enhanced to Rs 5000 crore. This sends a clear message to China that despite all their objections India is revamping its infrastructure. There have also been increased allocations for supporting innovations and encouraging technology development in the private sector.

As per reports the armed forces had surrendered Rs 2,400 crore from its capital budget last year. The government must re-consider implementing the long-term demand and recommendation of a rolling budget or non-lapsable fund. With increasing threats and reduced allocations such an action would prevent forces from depositing additional funds with government undertakings for future orders. They would also not be compelled to expend in a rush.

Capability development is a timeconsuming process as also demands for equipment placed currently would take years to fructify. Added to delays is the concept of make in India, where any global concern obtaining the contract has to commit to manufacturing a large part of the order locally. All this gets impacted when capital budgets are low. With maximum share of the capital and revenue budget being spent locally, defence is no longer a white elephant but a contributor to national economic development.

Inter-service allocations made by the finance ministry remain illogical. Capability development must be based on threat perceptions and a National Security Strategy (NSS). With a NSS lacking, it is the office of the CDS which is entrusted with joint capability development. Thus, logically, the finance ministry must allocate broad figures and let the Department of Military Affairs under the CDS to further sub-allocate based on emerging threats and essential capabilities.

Simultaneously, the government talks of ‘downsizing and not rightsizing.’ This implies infusion of technology to reduce manpower. This can only happen if budgets are sufficient. Even within the services there is scant regard for sharing resources. An example is each service seeking its own predator UAVs, most of which will be employed for similar tasks. Also important is creation of a central logistics corps reducing multiple supply chains in a theatre.

Finally, the services must understand that this is approximately the share of the budget they would receive. Thus, they need to consider its best utilization thereby obtaining the best bang for the buck. The national budget is simultaneously a message to adversaries. The more powerful the allocation for capability development the more determined the nation is towards facing its threats. The government must realize that the armed forces, apart from ensuring national security, are also engines for national growth and development.  

(The writer is a retired Major-General of the Indian army)