India's Defence Budget Constraints: Experts Weigh In

This edition of 'MVI Debates' brings to you well considered responses from senior veterans and defence analysts on ‘India’s Defence Spending’ following Sandeep Unnithan's article and the presentation of the defence budget.

India's Defence Budget Constraints: Experts Weigh In


Renowned Defence Journalist, Sandeep Unnithan’s piece No Silver Bullets for Defence, published in India Today, on 9 January 2021, raised several poignant questions and presented some well-considered views on India’s budgetary consideration with regards to defence spending. The article has been well received by both the veteran and serving fraternity and like any “good piece of journalistic work” served as a trigger to more discourse on the multifaceted subject; Responses from senior veterans and analysts have been presented in this debate on ‘India’s Defence Spending’ following the presentation of the Union budget.


Lieutenant General PJS Pannu (Retd), ex-GOC 14 Corps

Our reforms are personality based. Theatre Commands are not required. Joint staff in commands is adequate. Hurried restructuring is like making mountains of sand. One heard initially that Colonels would be promoted to Major Generals. Brigades will be larger. Then we hear Brigadiers retirement age is going to be increased. The papers and media carry information some serving community learns from media about pension reforms. No internal debates are held. So difficult to comment on right or wrong without knowing what baselines are being or not being set.

Major General Vijay Pande (Retd), Academic

India’s defence spending hovered around 3.5% of the Gross Domestic Products (GDP) in the 60’s to the 80’s. In the 1990s it remained around 2.5%. This trend continued through the first decade of the 21st century. From 2014 onwards it has steadily dropped by approximately 0.1% annually. In the current year’s budget, allocation for defence constitutes 2.15% of the GDP.

As the budgetary allocation has steadily reduced, the threats have correspondingly increased. As is well known, the Jammu and Kashmir (J&K) insurgency exploded in the early 90s and continues to fester till date. India also fought the Kargil war and was subjected to mega terrorist incidents such as the 26/11 Mumbai attacks. 2017 onwards there has been an exacerbation of the Chinese threat.

The security environment in South Asia has steadily deteriorated even as the warfighting appetite of the US has correspondingly declined. India’s Research and Development (R&D) has been woefully inadequate in the defence field. There are many examples of unduly delayed projects. To name a few, the Main Battle Tank Arjun design and development started in 1972, the NAG anti-tank missile started in 1988, Tejas 1984, to name a few. None of these have yet become the mainstay of our defence forces and India continues to depend on foreign military hardware to meet its critical defence needs.

Defence production has been another sorry saga with the subpar performance of the Ordnance Factories and the Ordnance Factories Board (OFB) without any accountability. While the Indian economy started opening after the 1991 economic crisis, the defence industry in India continued with its archaic laws and procedures well into the 21st century. As a result, the private sector has not been able to become a major player in defence production.

India’s armed forces are highly manpower intensive, especially the army. It can be argued that with such large land frontiers over varied terrain and facing two hostile neighbours, large manpower is unavoidable. Our infantry battalions and armoured regiments are among the heaviest in the world in terms of numbers and equipment.

Organisationally also tri-service synergy is lacking. To quote an example, China has one military area command in Tibet with all resources under one commander within it to deal with the Indian frontier from Ladakh to Arunachal Pradesh. India on the other hand has Northern Command, Western Command, Central Command, Eastern Command, Western Air Command, Central Air Command and Easter Air Command (7 Commands) under different commanders to deal with the Chinese threat.

In case of the Navy, the Eastern Naval Command would be involved as well as the tri-services Andaman and Nicobar Command. Additionally, the Strategic Forces Command will also be a major player. One wonders how if at all any synergy, cooperation and interoperability will come about with this kind of an arrangement.

A similar situation prevails regarding the plethora of Intelligence agencies reporting to different bosses. As a result, despite tall claims, our Intelligence, Surveillance and Reconnaissance (ISR) Capability remains inadequate. We were surprised in 1962 as we did not read the Chinese intentions correctly; 2020 was no different. Not only did we misread the Chinese intentions, but we also failed to pick up the massive force built on the Tibetan plateau. The stories of Sri Lanka, Kargil and the 26/11 attacks need no elaboration. There is no accountability and needless to say, the ISR structure itself is due for a thorough upgrade.

Clearly as India aspires to become a 5 trillion-dollar economy in the years to come, its developmental needs will overshadow the defence requirements. There is simply no scope of returning to the era of 3% of GDP allocation for defence. We will have to make do with what the country can afford. Breast beating is not going to get us anywhere. While the allocations for defence have been historically low as stated above, it is axiomatic that additional resources are made available as and when needed.

Greater accountability needs to be brought in. The private sector needs to rise to the challenge. The armed forces also need to look within. Some hard decisions are already overdue. The higher defence management must be unified, if necessary, by a legislation (like the Goldwater Nichols Act 1986 in the USA) to bring in better synergy as well as optimisation of resources and tide over interservice rivalries and turf battles.

The infantry, armoured, mechanised and artillery battalions must be made lighter. At the unit level, the infantry battalions must shed at least 50 men per unit. These must be utilised to raise new battalions. The armoured regiments and mechanised battalions must be based on 35 tanks/Infantry Fighting Vehicles (IFVs). The extra ten Armoured Fighting Vehicles (AFVs) thus made available can be utilised to create more armoured and mechanised infantry units.

Similar exercises need to be done within the Artillery. Heavier caliber weapons must be lesser in number per regiment as compared to lighter caliber guns. World War II type organisations need to be overhauled and the armed forces must become leaner and more effective to deal with contemporary and future challenges. The biggest enemy is the frozen mindset which refuses to change with the times.

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Major General CD Sawant (Retd), ex GOC Inf Div & Comdt MLIRC

In the backdrop of the ongoing standoff with China and impetus for military modernisation, the allocation for capital expenditure in the Defence Budget saw an increase of ₹21,326 crores or 18.75% compared to Budget Estimates (BE) of last year. Budget data also shows that the armed forces got an additional allocation of ₹20,776 crores under capital expenditure last year for emergency procurements in the face of massive mobilisation along the LAC.

The total allocation for defence in the Union budget at ₹4.78 lakh crore including defence pensions, is a marginal hike compared to ₹4.71 lakh crore last year, an increase of 1.48%. This is excluding funds allocated for pensions. The allocation for 2021-22 stands at ₹3.62 lakh crore excluding defence pensions which stood at ₹1.16 lakh crore. Excluding defence pensions, the hike is about 7.34%, up from 3.37 lakh crore to 3.62 lakh crore. However, data shows that defence pensions have gone down significantly from the Budget Estimates of last year.

The capital allocation in BE last year at ₹1.13 lakh crore went up to ₹1.35 lakh crore in the BE this year, an increase of ₹21,326 crores. Referring to the almost 18.5% increase, a Defence Ministry statement said, “This is the highest ever increase in capital outlay for defence in the last 15 years.”

The 15th Finance Commission observed in its report that the expenditure on defence services as a proportion of GDP declined from 2% in 2011-12 to 1.5% in 2018-19 and to 1.4% in BE 2020-21. We all know that armed forces have always been requesting for defence budget to be 2.5% of the GDP but never received it.

I would like to quote an interesting interaction between then Chief of Army Staff (COAS) General Ved Prakash Malik and Montek Singh Ahluwalia who was then in Ministry of Finance and Acharya then Chief Economic Advisor to Govt of India in 1998. I was then in Financial Planning Directorate as a Director handling Revenue Budget. The COAS had directed us to prepare a presentation to the above duo to explain how the edge of the Indian Army is being blunted due to lack of adequate funding.

After the presentation Ahluwalia said, we are acutely aware that the edge has been blunted but Bharat Mata can afford to spend only that much amount for defence. As regards our neighbours are concerned, the government will manage them politically. But whenever required, the Finance Ministry will pitch in in an emergency. After that, the COAS directed that we need to save some funds for procurement of essential armament and ammunition, and he directed that we need to reduce the troop level by 50,000 and the money thus saved can be used for Capital expenditure.

That is how the direction of stopping of further recruitment was issued and it did affect the units in the field very adversely. At the end of the year, the Additional DG FP approached the Financial Advisor Defence Services (FADS) to allocate a certain sum saved by cutting down recruitment. The FADS laughed and commented that you guys should know that savings by reducing troops by 50,000 is part of Revenue Budget and you guys want additional funds as part of Capital budget which requires sanction by Finance Ministry, however, to please you Chief we are allocating additional funds for capital procurement.

So, every time armed forces request for additional allocation the Finance Ministry turns down the request. Generally, the budget should at least be enhanced by 10% each year to take care of inflation but this year like many previous years it has enhanced by 7.34 % only. It is a good thing that this year an additional amount has been sanctioned for Capital expenditure, which does indicate that the government is concerned about Indian Armed forces facing twin challenge. There is drastic need of a reorganisation of Indian Armed Forces.

There are 17 Commands of all 3 services which are white elephants, but the inter-service rivalry and one-upmanship always delay the crucial issues. Many crucial recommendations of Shekatkar Committee Report are yet to be implemented. Moreover, the formation HQ for their own needs and comforts always attach troops from subordinate units thus affecting the bayonet strength of the units. We definitely need to put the house in order before we approach the government to enhance the defence budget.

‘Atma Nirbhar Bharat’ and ‘Make in India’ are good slogans but on the ground, truly little is happening. FDI has been enhanced to more than 70% but by the time the funds pour in, and manufacture commences it is going to be minimum 10 years, till then we need to save every rupee that is being wasted at present.

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Brigadier Pradeep Sharma (Retd), ex-NSG (SAG), DS AWC

It is a well-known fact that India has no vision document for securing her national interest nor for her economic path to growth. Strategic directions are not penned down for the Armed Forces giving them much desired objectives/tasks. Other than 1971 where I do believe Field Marshal Manekshaw got sufficient time and support to prepare for war and this implies funding too, India has always been in a reactive mode.

The last two being Kargil and Ladakh. Budgetary constraints, lack of vision and knowledge of military affair within bureaucracy and politicians has been a major stumbling block. Defence production has been mired with selfish interests of the concerned department, preventing the development of a Strong Defense Manufacturing base which could have generated much desired autonomy as well as revenue.

Even the Atma Nirbhar plan as has unfolded recently aims at facilitating big players close to the party at the center. That notwithstanding, it cannot provide for immediate needs in the face of the Chinese! Selling defence land and other narrow ideas like playing around with terms and conditions of service will not be of any use other than demoralising those in service. In the short to mid-term the present attitude of the government is likely to be harmful not only to the Armed Forces but also to national interest.

Further, the knee jerk purchases of Bofor's ammunition off the shelf as well as the present rush to contract defence equipment reflects on poor planning while at the same time confirming to our adversaries our lack of military preparedness. Once the snow begins to melt, we can expect the Chinese to flex their muscles to create more trouble. Semantics do not work. Depending on the United States of America (USA) and others cannot be taken as a fool proof way of securing our interests.

Brigadier Sarvesh D Dangwal (Retd), ex-Comdt AIPT & DDGPT

The nature of war fighting has/is changing. Innovative applications of new technology have brought about change in military doctrines, operational and organisational concepts. This has fundamentally altered the character and conduct of war in our context too. Theatre commands is one such.

The Line of Actual Control (LAC) has become alive post June 2020, and this has largely changed our force deployment with a bias towards ATR. The Galwan incident has completely disbalanced our road map for big time transformation and thrown us into the bear hug of Russia from where acquisitions worth ₹50,000 Crores have been purchased under emergency purchases. (Based on media reports)

Logistics costs have also been imposed by enhancing troop deployment and infrastructure development. The 18 trillion $Chinese economy is a huge instrument to brow beat us. We are lacking in technology infusion and it will be years before we can substantially improve, even with baby steps having been taken in the right direction. The People's Liberation Army (PLA) will keep upsetting our transformation drive. We can manage the Line of Control (LoC) but it is here where we shall be at a disadvantage owing to technology driven vectors of aggression.

The South China sea must be kept active by the Quad agreement to ease pressure on land. It is to be seen after the thaw in the Himalayas what awaits us. PLA will engage us at below threshold levels to impose economic costs and to keep on hold any escalation. As China has the capability of escalation control and management, it will always enjoy advantage.

Brigadier Rajiv Williams (Retd), Author & Analyst

The author (Sandeep Unnithan in his article 'No silver bullets for Defence') has based his arguments on certain pre-determinants after discussing background realities and analyzed various aspects on strategic partnerships, advancement in technologies, issues relating to military reforms and proposed re-structuring. However, in all the discourse the missing link, which the writer has conveniently omitted is the man behind the military architecture i.e., men and the leaders, the two keys to success.

To put this quagmire in a correct perspective the military strategy hinges on a functional and conducive factor of the two protagonists i.e., the civil bureaucracy – military men. Hence a deep dive in the civil-military relations should have also been discussed and suggested solution of gaps could well have been highlighted.

While we understand there are no permanent ‘Friends and foes’ where ‘National interests’ and ‘National security’ is concerned yet till we as a Nation state become ‘Atmanirbhar’ or ‘Self-reliant’ in matters military, the importance of respecting partners who stood by us during times of crisis need a favored status. Hence the reflections on the breaking up of Soviet Union or the reforms of China over the past several years in the article seem to be out of context in the discussion.

In fact, such a read lends toward us as being reactive instead of us adopting a more proactive stance. The recent events have brought about a change in our strategy and could have been discussed, which reflects on being more offensive and perhaps moving toward the ‘Policy of Assured Response’. Such thinking has resulted in the debate of restructuring of the armed forces and creating ‘Integrated Theatre Commands’.

Having said thus, I also believe that our reforms should be focused around where we want to be in the next 20 to 30 years with clearly defined objectives. It is in such thinking that will help us to maintain the position of remaining a ‘Regional power’ and not mix up with furthering our ambitions of trying to become a ’Global power’, although our long-term ambition would be to achieve that status. If adequate clarity of purpose is well enunciated with defined aims and objectives, then we need to align our thinking accordingly and equip ourselves appropriately to meet immediate perceived threats.

Such analysis will lend toward restructuring selectively and creating offensive capability with smaller more balanced ‘Integrated Theatre commands’ at locations for selective targets. However, I would like to add that status quo with existing organizational structures should also remain intact to undertake other operational tasks.

If there was a mention on the issues indicated above, then the analysis would have led to a more incisive discussion on the needs of manpower and equipment to meet the challenges as also on linking the strategies of ‘Policy of Prestige and Status quo with ‘Policy of Assured Response’. Such a discourse would have found greater interest assessing options in the context of ‘Balance of power’ in the South Asia Region and gone beyond the usual discussion in coffee cafes and bars to the halls of power and help in finding appropriate solutions to questions around military prowess and regional stability.

Brigadier IP Singh (Retd), ex-Infantry

It is a known fact that budgetary allocation for defence has often been well short of the actual requirements, except perhaps, in times when wars were more or less imminent. At best, it has been just adequate to maintain what is existing - men and material. At other times, even that may not have been the case. Perpetual shortages in military hardware in the past prove the point. Govts have often shown inclination to give more; this is generally reflected in various discussions and future projections. In reality, what is given is much less (perhaps due to financial constraints).

Allocations, very often, have been going down when analysed in real terms. In this regard, discussion of allotted figures can be highly misleading for two reasons. One, costs are always going up, and two, value of rupee is mostly going down. Consequently, the marginal increase in the budgetary figures (a common occurrence), hardly makes up for these two factors, let alone modernization and so on, unless the hike is in big numbers.

The LoC had always been active, even before insurgency. In addition, past thirty years of insurgency in J&K has further resulted in large scale deployment of Army, causing a greater need of troops, weapons and specialised equipment. There is a frequent requirement of turnover of units as well. China's belligerent actions in the past year or so, have sharply activated the LAC also, forcing more commitments of troops, creation of more infrastructure as well as problems of logistics. This not only demands change in strategy, but also bigger allocation of funds.

There are reasons for the armed forces' preference for buying their needs off the shelf from foreign countries. One, better quality and secondly, extreme delays in indigenous production through DRDO. Self-reliance, of course, is the ultimate answer. However, indigenous production requires serious research, latest technology, and excellent manufacturing facilities, which DRDO lacks.

Unless they are made accountable for completing time bound projects, matters will not improve.

The creation of theater commands is a good idea. However, let things evolve over a reasonable period and thereafter go through the process gradually.

In conclusion, it is quite apparent that a great deal of sustained increase in funding would be required for: modernization, structural overhaul, defence oriented research, quality indigenous defence production, looking after two fronts simultaneously, and so on. Otherwise, there is likelihood of plans/objectives not being achieved in their designed shape. No doubt, country has many problems, for which money needs to be spent. But then, nation's security and territorial integrity must be accorded the high priority they deserve.

National Warfighting Doctrine: A Way Forward...

Major General Rana Goswami (Retd), ex-Arty, Ex AAC

The entire gamut of how’s and whys of war fighting and utilisation of our armed forces for the defence of its land and Island territories stems and flows from the "National Doctrine on War Fighting". Is there any such doctrine, which clearly lays down these how’s and whys? I think not and for as long as we don't have one, there will be adhocism in every aspect.

It will be there in the numbers and types of fighting formations, their equipment for fighting wars, based on terrain and location, the numbers, and types of aircraft of different types based on the envisaged roles that they're needed for, as also the numbers and types of surface and sub surface ships and aircraft required by our Navy, for their envisaged Blue/Brown water role and utilisation, in the gamut of nation's overall war fighting strategy.

For ease of functioning and understanding what is and how much is required, in what quantities and in what time frame, with built in redundancies. From this would flow what to make through research and indigenous development and what and how much to import and from where, keeping in mind what we already have, to ensure better inventory management.

To get rid of adhocism, this national doctrine is a must, so that everyone, the politicians, bureaucrats, and soldiers are on the same platform and page, working towards building and utilising our defence forces towards the fruition of our national doctrine within laid down timelines. So, till we have that, you can discuss till the cows come home, but you'll only be in a reactive mode and adhoc functioning, based on what our enemies say or do.

Add to the Discourse, Keep the Conversation Going!

The editorial team at ‘Mission Victory India’, invites responses for the purposes of furthering this debate. Views, based on your professional experiences may be sent at:  [email protected]

(Views expressed are the respondents own and do not necessarily reflect the editorial policy of Mission Victory India)

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