India’s defence budget: A reality check

Despite the excitement over the Union Budget announced by Finance Minister Nirmala Sitharaman on February 1, 2023, a small group is disappointed, and that is India’s defence manufacturing industry.

Updated Feb 3, 2023 | 11:05 AM IST

Finance Minister Nirmala Sitharaman presents the Union Budget 2023-24 in the Lok Sabha, in New Delhi, on February 1, 2023 (Photo: Sansad TV)

Photo : IANS
To those who look for numbers to tell the story of a country’s defence budget , the latest Union Budget announcement by India’s Finance Minister Mrs Nirmala Sitharaman , shows an allocation of nearly 6 lakh crores - Rs 5.93 lakh crores, up from the Rs 5.25 lakh crores of last year-and thus a hike in India’s defence outlay by nearly 13 per cent at Rs 1.62 lakh crores. It is mostly to address the “Revenue’ expenditures of pay and pensions (expected at Rs 2.7 lakh crores). That is a burden that India must bear for its manpower-intensive armed forces.
Broadly speaking the defence budget is normally divided into ‘Capital’ expenditure to purchase big ticket weapon platforms – artillery, fighter jets, ships and submarines, etc. all that what military experts term as ‘force multipliers’; and ‘Revenue’ expenditure, that goes towards money spent on salaries of armed forces and pensions of veterans; and a very large number of civilians that make up the Ministry of Defence and DPSUs (it is Public Sector Undertakings for Defence Production) and the vast network equipment maintenance, and R&D organisations. Thus, that leaves at best 15% of the money from India's defence budget, to buy ‘big ticket weapons’ including platforms made in India.
This is what the critics of the allocation for defence budgets have often bemoaned – and so has the military establishment – along with the lobby of local defence industries, about the small amounts allocated for the purchase of new weapon platforms for the defence indigenization, especially after the hype for ‘Make in India’ initiatives for the armed forces. For that to succeed in the near future, they’d expected more money to be made available for the purchase of local weapons systems. But official figures show that the armed forces weren't even able to use the full amount allocated earlier of Rs 1,364 crores for the ‘Make Procedure’ in India, with 122 crores left over last year. A big reason for that is the lengthy and tedious selection process for new technologies to be selected and then bought. Thus, only a 7 per cent hike was made for Capital expenses, i.e, for the order and purchase of weapons, encouraged by the fact that the IAF has surrendered – from last year’s allocation - Rs 1,837 crores, due to a revision in its estimates for expenses, out of the Rs 1.52 lakhs crores allocated.
This has given the Finance Ministry reason to assume that funds could be better used not for hi-tech weapons, but for the development of India’s border infrastructure. With the Chinese staring down at us, roads leading to the borders need an even greater push, and hence a 43 per cent hike for the BRO from Rs 3,500 crores to Rs 5,000 crores. Additionally, to immediately allocate money for the rise in the pension bill, where the requirement has exceeded budgeted estimates of last year, from Rs 1.19 lakh crores to Rs 1.53 lakh crores, as Rs 23,600 worth of OROP arrears have to be paid out. As the lifespan of the older generation of military veterans rises – as it does across the country with better health care – apparently the Modi government has chosen to keep to its promises to ex-servicemen (that’s increasingly a vote bank).
So, despite the excitement over the Union Budget announced by the Finance Minister, there is also a small group that is disappointed, and that is India’s defence manufacturing industry. But as India’s defence spending as a proportion to India’s government expenditure has only declined - as has been the trend over the years- to astute observers this budget wasn’t surprising. But as past experiences have shown, when a crisis hits India – like the Kargil conflict in 1999 or the Chinese intrusions of 2020 – the government will have to buy new weapons technologies from the cushion funds available. For now, Mr Modi’s government has many priorities this year- as the country would go to polls next year – and money spent on projects that will have an impact on the citizen obviously takes precedence.
As per SIPRI (the Stockholm International Peace Research Institute) - which gives an authoritative account of defence spending worldwide -India has since 2020 been the third-largest spender on the military after the US and China. But the harsh reality is that both the US and China are so far ahead of India in defence spending and the modernization of their forces, that India is left with harsh choices to make. This isn’t altogether a bad thing as it will force our armed forces to prepare for defending India, with what they have, and to focus on buying Indian-made items, rather than their expensive western equivalent. Also, as the Galwan standoff with the Chinese had shown in 2020 and the regular battles with the Pakistani armed and trained militants across the LOC and within J&K tell us that you still have to fight them with blood and guts. Arming the soldier who does this fighting, doesn’t demand as much money as hi-tech platforms, and this must be the highest priority.
The large inventory of high-end military platforms is essential for deterrence. Thus, with limited money for defence, India has from the very beginning adopted the concept of minimum deterrence- once it chose to go nuclear in 1998- as against piling up large stocks of expensive nuclear weapon systems, unlike the Pakistanis, who have gone broke trying to be one up on India. A realistic appraisal of India's defence outlays would thus tell us that New Delhi has done the sensible thing.
Disclaimer: Maroof Raza is a guest contributor. Views expressed are personal.
next story