Meagre budget may hit DefenceMin plans

After years of neglect, India is trying to narrow the military gap with China, which has been building up its fleet of ships and submarines making forays in the Indian Ocean. Beijing is expected to authorise robust 2015 defence spending this coming week despite its slowing economy, largely to beef up the navy with anti-submarine ships and develop more aircraft carriers beyond the sole vessel in operation.

The defence budget was increased by 10.95 per cent to Rs 2.46 lakh crore for the next fiscal as compared to the revised estimates of Rs 2.22 lakh crore for 2014-15 as the government focuses on ‘Make in India’ to curtail over-dependence on imports. While the Government had last year allotted Rs 2.29 lakh crore in the Budget, it was revised to Rs 2,22,370 crore. The defence budget for 2015-16 represents a growth of about 7.74 per cent over last year’s budget estimates.

Finance Minister has earmarked Rs 94,588 crore for military modernisation, which works out to 38 per cent of the total defence outlay. Incidentally, Rs 12,622 crore meant for modernisation last year remained unspent. Of this, Rs 5,992 crore was diverted towards revenue spending. India is seeking to fast track its military modernisation and has a number of pending deals ahead like the multi-billion contracts for 126 multi-role combat aircraft contract.

The other major acquisitions expected to be finalised include the deals for 22 Apache combat choppers, 15 Chinook heavy-lift helicopters, 197 light helicopters, 145 Ultra-light Howitzers and besides new submarines and vessels for the Indian Navy. The Navy needs new submarines and stealth ships to counter the Chinese presence in the Indian Ocean, which New Delhi has long seen as its sphere of influence.

In 2010, India overtook China as the world’s biggest importer of defence equipment, according to the Stockholm International Peace Research Institute (Sipri). Indian Air Force, Army and Navy have placed orders worth Rs 83,858 crore from 2011 to the last fiscal.

But the limited rise in the military budget -- three-quarters of which is spent on maintaining the world’'s third largest standing force - means only some new weapons will be ordered this year. The modernisation of defence forces has been neglected over the years that may have serious repercussions like what we saw in 1962 Chinese incursion.

Out of the countries that spend maximum on defence equipment the US stands at number one with an expenditure of $581 billion followed by China $132.4 billion and India is at 8th position with an expenditure of $45.2 billion.

The worst is shortage of young leadership (junior officers 15,000) in the Armed forces for which the country is showing a complete neglect. Where is the manpower to fire those modern weapons? Despite repeated assurances, the much-talked-about “one rank, one pension” (OROP) scheme found no mention in the Union Budget on 28 February stuck as it is between the Services and the Defence Ministries.

IHS Jane’s Defence Budgets projects that India’s defence spend will reach $65.4 billion in 2020 despite cuts announced by the government recently, caused by the challenging economic and fiscal climate. This obstacle is expected to wane over the next three years, with IHS expecting India’s GDP growth to recover to rates of around 8 per cent by 2015 – allowing India’s plans for increasing defence spend to recover from 2015 to 2020.

Based on current projections, IHS Jane’s Defence Budgets expects the Indian defence budget, including related pensions obligations, to reach $55.6 billion over the five years. Will Finance Minister please kindly make a note?

By: Dr PK Vasudeva