Defence and planning march together

The defence budget gets passed without much attention to its past, present or future relevance

Over the years India’s defence budget has become a ritualistic affair. It is treated as badinage by scholars, analysts and policy makers. Poor understanding of defence planning, ritualistic and non-innovative approach by budget-making establishments and stakeholders, lack of debate in the Parliament and the media, and inadequate attention by research institutions are some of the factors responsible for such a state of affair. Lack of strategic culture and our colonial legacy of treating defence issues with the utmost secrecy have hindered an educated debate on the issue. Year after year the defence budget gets passed in the Parliament without much attention to its past, present or future relevance in building India’s comprehensive military status.

This in not to suggest that there is nothing happening on the national security and defence issues. In the 1980s, Arun Singh’s Committee wrote a comprehensive report on defence-related issues. Post-Kargil war, there have been several high-level studies and reports. The Kargil Committee Report led to a more comprehensive national security review by the Group of Ministers. A number of task forces are looking into important strategic aspects under the National Security Council Secretariat and one has already submitted its report.

Reform processes on specific issues like ‘self-reliance in defence’ have been initiated by the government with recommendations from the Kelkar Committee. The government has now constituted another high-level committee to review matters related to defence technology, research and development. Considering the dismal performance of existing defence research, development and manufacturing systems, this had become necessary.

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All long-term military decisions are primarily economic decisions, which implies that unless recommendations made by these high level committees are reflected in defence planning, annual budgets and budgetary control systems, they will remain only on paper.

Unless right questions are asked, appropriate alternatives selected for comparison and economic criterion used for choosing the best, military power and national security will suffer. Perhaps, we need another committee to look into various aspects of defence finance. This could be a by-product of the in-house effort made by the Department of Defence (Finance), which organised a major international conference on defence finance and economics in November 2006. Themes spanning theoretical aspects of defence economics, optimal resource allocation, latest planning, programming and budgeting systems, audit and accountability in defence expenditure and procurement were debated by specialists in this first-of-its-kind seminar. We need to adopt some of these tools for our defence budget-making.

A glance at the trends in India’s defence expenditure suggests a few points to ponder over. First, India’s capital expenditure has grown from Rs 12,000 crore in 2001-02 to Rs 37,000 crore in 2006-07 — an increase of more than 300 per cent in five years. If capital purchase requirements in the 11th Defence Plan (2007-2012) of approximately Rs 450 billion are any indication, the corresponding capital outlays could be Rs 42,000-45,000 crore for the year 2007-08, rising every year up to 2012. Due to the inability of our domestic defence industry to meet the demands, a large part of this amount would be utilised for ‘capital purchases from without’ (read imports). That would obviously benefit the foreign military equipment suppliers, most of whom have already made a long queue to get a slice of the lucrative Indian arms bazaar pie. Self-reliance in defence thus needs serious prioritisation. Our recommendation is that defence equipment development and production should become an integrated part of defence planning.

Second, service-wise allocations within capital expenditure in the past five years indicate a substantial increase in the allocations for the air force and navy. The army has lagged behind in procuring critical requirements like the medium artillery gun, equipment for information warfare and additional force multipliers for the infantry. While some flexibility in the allocation ratio among the three services is unavoidable, institutional mechanisms in the civil and military planning directorates need to complement objectives for attaining comprehensive military power. Horizontal linkages among budget-making institutional structures at lower levels can provide effective facilitation.

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Third, in the last two years, a notable improvement has been witnessed in the lessening of gaps between budget estimates, revised estimates and actual spending. The ‘unspent’ and ‘surrender’ syndrome associated with defence expenditure in capital purchases appears to have been resolved. Effective steps should be taken to ensure its continuation when big-ticket defence purchases are made in the coming years.

Fourth, compared to the surge in capital expenditure, the share of revenue expenditure has come down from nearly 70 per cent in the 1970s to around 57 per cent in 2006-07. This is a healthy step: revenue expenditure must be kept under strict control. Keeping in view such a trend, the strength in each service needs to be right-sized.

In conclusion, it must be re-emphasised that the concept of defence planning and resource allocation has its genesis in an integrated defence policy.

Malik, a former army chief, is president and Mohanty is senior fellow at the ORF Institute for Security Studies