China's military deployment along the northern frontiers leads to a spike in India's defence capital budget, but the bigger challenge will be prioritising acquisitions to modernise India's military

by Sandeep Unnithan

SINCE THE BEGINNING OF THE BORDER stand-off in May last year, the military burden imposed by China on India has cost the nation roughly Rs 20,766 crore. India’s armed forces have had to buy additional weapons and military hardware after China suddenly deployed its military along the Line of Actual Control (LAC) last April.

This 20 per cent increase in capital expenditure, the difference between the budgetary estimate (what the government allocated) and the revised estimate (what it actually spent), was one of the highlights of the budget presented by Union finance minister Nirmala Sitharaman on February 1. While this might have been a one-time emergency spend, the trend is set to continue. The budget flattened defence expenditure, the 1.4 per cent hike was the lowest in several years, but boosted capital expenditure for the armed forces to spend on buying new warships, tanks and fighter jets and building border roads and bridges. Last year, it spent Rs 1.13 lakh crore. This year, it will spend Rs 1.35 lakh crore on buying new military hardware.

The overall stagnation in the defence budget this year is worrying but understandable given the enormous pressure on the government. Defence accounts for close to 10 per cent of the Union budget and is the second-largest expenditure after debt servicing.

The Rs 4.7 lakh crore defence budget has three essential pillars, revenue, capital and defence pensions. Revenue and capital, which cover salaries and expenses like fuel and stores and buying military hardware, together make up 73 per cent of the defence budget or

Rs 4.78 lakh crore. Defence pensions, what the government pays its 2.6 million ex-servicemen and defence civilians each year, is the third biggest component accounting for Rs 1.15 lakh crore (around 24.2 per cent of the budget). Last year, the pension budget grew faster than the defence budget because the government paid out approximately Rs 18,000 crore in pension arrears. The 13.4 per cent decrease in expenditure under the pension head this year has brought the armed forces reprieve.

How the armed forces handle the “highest ever increase in capital outlay for defence in 15 years”, as defence minister Rajnath Singh called it, will be closely watched this year. The modernisation backlog is enormous and the money will disappear quickly. This month, the Indian Air Force will buy 83 Tejas Mark 1 fighter jets from state-owned Hindustan Aeronautics Ltd, worth Rs 48,0000 crore, to replace over 100 retiring MiG-21 fighter jets. The navy will shortly issue requests for proposals for a Rs 45,000 crore project under which a foreign firm will build six conventional submarines with an Indian partner. The army plans to buy assault rifles, surface-to-air missiles and drones worth several thousand crores.

Laxman Kumar Behera, associate professor, special centre for national security studies at the Jawaharlal Nehru University, predicts a grim outlook for next year’s defence budget. “A high fiscal deficit can be explained in a year of negative growth but it is unsustainable in the long run and that is why the defence budget (which is the GoI’s second-largest expenditure head) will come under tremendous pressure,” he says.

Top government officials say they hope to reduce the ballooning pension budget by increasing the retirement age of both officers and men. This, as Chief of Defence Staff (CDS) General Bipin Rawat said in an interview last December, will save the government several thousand crores in the short run.

In the long run, the army, which accounts for over 50 per cent of the defence budget and over 80 per cent of its revenue and pension budget, has no option but to start shedding manpower. At 1.2 million troops, the Indian army is the world’s second largest after China’s People’s Liberation Army (PLA). The Indian army is actually larger than the PLA Ground Forces, which, after a decade of downsizing, now number less than 1 million soldiers. The Indian army needs these soldiers to patrol over 4,000 km of unsettled borders with Pakistan and China. Last month, army chief General M.M. Naravane spoke of the army being alert along the entire 3,448 km LAC with China. This could mean that a large number of soldiers have been deployed along the border for extended training deployments, ready to be launched in case China steps in to create trouble in other sectors.

Senior military officials admit the Indian army needs to shed at least 300,000 soldiers to be able to pay for modernisation. This will clearly be a long-drawn process but there is little evidence that it has begun in earnest. The modernisation undertaken by Gen. Rawat and followed by his predecessor Gen. Naravane is moving ahead slowly and has yet to identify these troop cuts. How this can be done when the enemy is at the gates will be the billion-dollar question, and answering it could literally save billions.