India News and Features Alliance (INFA) - Unplanned Exercise: MORE FOR NATIONAL SECURITY, by B.K. Mathur, 12 March 2007

Routinely the Union Finance Minister has provided more funds for defence in his budget proposals for 2007-08, like the annual increments the armed forces have been getting for decades without adequate expert planning and programming. A provision of Rs.96,000 crore has been made with a commitment, again routinely, that “any additional requirement for the security of the nation will be provided.” The allocation is Rs.7,000 crore more than initially provided for the current fiscal. Considering the revised estimate, it should be Rs.10,000 crore increase in view of the Ministry’s failure to utilize Rs.3,000 crore, a trend which has become a regular annual feature in view of bad defence planning in regard to modernization efforts.

The budgetary allocation for the coming financial year includes Rs.41,922 for capital outlay and Rs.37,458 for revenue expenditure (day-to-day expenditure) as against Rs.89,000 crore and 34,458 crore respectively initially earmarked for the current fiscal. This means that India’s defence spending will continue to hover around 2.5 per cent of the GDP against the experts’ defence demand of 3 per cent. There is always a demand for more and more to spend, even if you can’t do it. But the most important point is that India’s defence spending continues to be less than that of immediate neighbours Pakistan and China, which have been spending around 4.5 per cent of their GDPs. But of greater concern is that the modernization plans will continue to go on in its typically slow manner, leading to failure to spend what has been allocated for the purpose.

Why does this recurring ghost of unspent funds continue to haunt India’s arms modernization programme? Failure of the Defence Ministry to improve its procurement procedures which continue to be faulty despite thoughtful recommendations of the Group of Ministers (GoM) after the Kargil operation in 1999. In fact, if one goes by the “committed liabilities” of the Defence Ministry towards procurement of weapons and weapon systems, a major chunk of the capital outlay of Rs.41,922 crore proposed for the next fiscal should go in terms of installments towards big deals for armaments signed in recent years. Most of these deals took a long time to finalise, resulting in cost escalations and failure to fully utilize the allotted funds.

These deals include the French Scorpene submarine project costing Rs.18,798 crore, the Russian Admiral Gorshkov aircraft carrier deal for the Navy for Rs.6,900 crore, Rs.,8,000-crore British Hawk deal and the Israel Phalcon AWACS deal costing Rs.5,000 crore. The Army too has projected a plan for its artillery modernization at a cost of Rs.8,000 to 10,000 crore. Besides these, the Defence Ministry should be finalising soon its other proposals, including the Indian Air Force’s urgent requirement for fighter aircraft. It is more than one year since the Government had agreed in principle for the procurement of 126 fighter aircraft to replace the earlier outdated versions of the MiG aircraft. Informal offers have already been made by different producers, but lack of planning, not funds, is mainly responsible for the delay.

In fact, successive Finance Ministers have followed faulty budgeting system for the armed forces all these years. In a well-researched write-up, a retired Colonel, P.K. Vasudeva, states: the “system should ensure that the right amount is spent on defence in the light of the pattern on national priorities and the right military capabilities are developed in the light of the structure of security priorities… the defence budget, in short, must be seen not only in terms of what we must defend ourselves against but what we have to defend… Once the tasks are defined, the question of building up the capabilities to perform them follows by formulation of plans for specific programmes.

“If the scarce resources are to be spent efficiently for defence the budget has to be the vehicle for implementing the programmes so planned. This has not been possible in Indiassions and objectives”. as defence budgets are drawn up in terms of inputs (amounts spent on acquisition of arms, personnel etc) and not programmes designed to enable the defence to meet the tasks set for them. Equipment is acquired without taking account of the personnel required to use them or their training. Budgets in defence are focused heavily on “acquisition” rather than on building capabilities. No such exercise has far been undertaken to ensure that the budgetary provisions for the armed forces are based on their “mi

In an effort to ensure the objectives and accountability, the concept of Planning Programming and Budgeting (PPB) was introduced in the United States during the 1960s. The UK too followed this method. But subsequently it was found inadequate to link the military strategy with defence budgeting. The concept of Quadrennial Defence Review (QDR) was then introduced for a five-yearly comprehensive review of the force structure, modernization plans and other elements of the military planning and programming for the next 20 years. Unfortunately, India’s planners and financial advisers have failed to follow what the militarily advanced countries like in US and the UK practise while planning budgets for their armed forces.

In fact, it is necessary to have in place some institutional system for budgeting for the armed forces, with much say of the Defence Ministry, which presently does not have any decision-making authority for military budgeting. The Financial Adviser (Defence Services) draws up the budget on the basis of the projection of the three military Services in isolation after, of course, bilateral discussions with the Service Headquarters and the Finance Division. The allocation is routinely decided on the basis of previous years, budget provisions and revised expenditure towards the end of the financial year and ongoing programmes without even caring the progress in those programmes finalized without working out priorities.

Again, there is need to take note of what happens in the UK before finalizing the annual budgetary allocations for the armed forces on the basis of the QDR—the 20-year plan which, remember, the late Jagjeevan Ram had thought of seriously as the Defence Minister but failed to implement the idea because of vested interests which cared more for personal gains rather than national interest. In Britain there is a Council, headed by the Defence Minister. It takes all policy decisions in consultation with the Service Chiefs and expert advisers on military strategies and force levels required to execute the strategy and lay down policy framework as the main guideline for working out the defence budget. We need to have such institutions like a defence council or defence management board.

The long-planning concept for defence budgeting, first proposed by the Plawden Committee of the UK, necessarily requires honest integration of the Service headquarters with the Defence Ministry which has been suggested by various experts and this column for years. A meaningful budget for the armed forces has need to be prepared by a body, “committee or a council or whatever you name it, comprising the Service Chiefs, Defence Secretary and the other Defence departments under the Defence Minister. It is only this body which should take decisions that alone should guide the budget-makes. Routine budgeting should now stop in national interest.---INFA