Chidambaram links availability of funds for the sector to India’s growth story

If the observations of Union Finance Minister P. Chidambaram are any indication, it is going to be an austere year ahead for expenditure on defence or on the police forces.

Linking availability of funds for the defence sector to India’s growth story, Mr. Chidambaram, delivering the K. Subrahmanyam memorial lecture earlier this month, said “growth is the key for greater public welfare and greater security”. As sluggish growth is likely to clock 5.5 per cent and the social sector vying for greater attention, it is likely that defence allocation in 2013-14 budget will be under pressure and allegations of scams in mega defence deals will only add to the woes of the sector.

Turning to modernisation

In the last budget, the government had kept up the tempo to modernise the armed forces and then Finance Minister Pranab Mukherjee increased defence spending by about 18 per cent and hiked the budget for capital acquisition by 15 per cent. He had earmarked Rs. 1,93,407 crore for Defence, which is 1.9 per cent of the GDP. The figure was 12.97 per cent of the total expenditure by the government.

While the country is expected to spend over Rs. 50,000 crore each year toward modernisation of the armed forces, the military spending has hovered between 1.97 and 2.4 per cent of the GDP over the last few years. Mr. Mukherjee’s allocation represented a growth of 17.63 per cent over the budget estimate of Rs. 1,64,415 crore for 2011-12 and a 13.15 per-cent growth over the revised estimate of Rs. 1,70,937 crore for the last fiscal.

The government, with its emphasis on increasing indigenous content in defence procurement, has been allocating funds for the Defence Research and Development Organisation (DRDO). But there is a steady decline in utilisation of funds for the job.

While calling for more resources to the security related manufacturing and services sector, Mr. Chidambaram had made out a case for allowing more players to change the scenario by stepping up investments in a big way if India wanted to become an aerospace and aeronautical manufacturing centre. He noted that indigenous advance light helicopter, light combat helicopter, light utility helicopter, intermediate jet trainer and basic trainer aircraft were still at the stage of design and development. The main battle tank, Arjun, was inducted into the Army in 2004 after many years of development and the next model is still some years away.

With the resources crunch making its presence felt, veteran defence analyst C. Uday Bhaskar says that big ticket purchases like 126 medium multirole combat aircraft Rafale from Dassault Aviation of France might be put on hold for the time being. “For the defence sector, this year is going to be a lean year.”

Strategic insight lacking

Lamenting the lack of long-term, macro strategic planning for the overall national security, he said absence of strategic insight in defence planning, budgeting and expenditure had played havoc. While emphasising the development of indigenous capabilities, he regretted that nearly four million uniformed soldiers of the Army and paramilitary forces were still burdened with old assault rifles and ordnance factories were yet to produce a modern rifle for the jawans.

The Army also plans to speed up its plan to modernise artillery after the move to procure ultralight howitzers through foreign military sales got materialised.

The Parliamentary Standing Committee on Defence too had identified issues like swifter procurements, modernisation of industries, functioning of cantonments and stations, cyber security, modernisation of military airfields, service matters for review.

Speedy defence procurement, especially armaments, is one of the major challenges being faced by the armed forces and the country on an average spends around $10 billion (Rs. 53,000 crore) each year to modernise its forces. India has a land border of about 15,000 km with Pakistan, Nepal, Bhutan, China, Bangladesh and Myanmar and a small length of 106 km with Afghanistan. The country’s coastline extends to nearly 7,500 km and it was only after the 26/11 terror attacks in Mumbai in 2008 that India strengthened coastal security.

On the other hand, in India’s neighbourhood, China had raised defence spending by 11.2 per cent in 2012, taking its annual military expenditure beyond $100 billion as it goes ahead with the plans to modernise its armed forces. However, analysts point out that China faces a set of security challenges that are different from the ones confronting India.