Coping With A “Logically- Uncertain” Defence Budget

Fifteen years ago, in 1988, three years into the 1985-1990 Defense Five Year Plan, funds had not been released for plan projects – the failure of the 1986 monsoon was followed by a prolonged drought, which compelled funds to be restricted for defense. This year, three years into the current Tenth Defense Five Year Plan (2002-2007), funds have yet to be released for plan projects. This is not a coincidence. It is a basic reality in monsoon-dependent India. Drought relief must always receive precedence. 

There is also a political reality. A coalition government is compelled to find the resources for its ‘common minimum program’. Five years later, should a different coalition government take office, it too cannot shirk allocating resources for its new ‘common minimum program’. Added to this is the economic reality of the ‘fiscal deficit’.

These logical realities have undesirable implications for the ‘capital’ segment of the defense budget. At present, ‘revenue’ expenditure (pay, allowances, training, maintenance, logistics, etc) takes up more than two-thirds of the budget. This leaves less than a third for ‘capital’ expenditure for: 

  • New acquisitions to replace obsolete assets. 
  • Modernization or upgrades of existing assets (like the Navy’s ships, submarines and aircraft, the Army’s armor and artillery, the Air Force’s air squadrons and the weapons of the three services). 
  • Developing the command and control systems needed for network-centric and network-enabled operations.
Since funds are limited, and not infinite, an unpredictable outcome will always persist between the allocations for defense and the allocations for social development (education, health, drinking water, roads and other infrastructure). There will always be pressures to reduce the ‘deficit’ by cutting back on defense expenditure. From a common-sense point of view, it is wise for defense planners to accept that this situation will continue indefinitely, regardless of the percentage of the GDP earmarked for or allocated to defense. 

This being so, reforms need to be thought through on how, without degrading operational readiness, the acquisition or modernization segment of the defense budget can be bolstered by savings in revenue expenditure. For example by:

  • Reducing personnel costs by outsourcing or by not replacing civilian retirees; this would help yield savings in the long term. 
  • Reducing maintenance and logistic costs by cocooning whatever assets are cocoon-able (tanks, artillery, aircraft, submarines) to extend life in our hot and humid tropical climate.
  • Changing the way each service trains for war.
  • Becoming more cost-efficient (readjusting traditional arms / services / branch roles, outsourcing refits, closing bases, retiring old assets to cut rising maintenance costs rather than prolonging their in-service life to make up numbers and so on).
A case in point is the modernization drive presently underway in the Army to improve its surveillance, communication and firepower capability and modernize its infantry divisions. If the Army is to be ready for intensive battle at short notice, then its modernization program depends on funds being available for time-bound completion. If, however, for the reasons discussed above, the steady flow of funds is likely to remain uncertain, modernization will be piecemeal. Much the same reasoning is applicable to the Navy and the Air Force. 

Another reality is that present structures, roles, practices and procedures of the Navy, Army and Air Force have evolved after long years of experience. Within each service and within segments of each service, there will be logical and understandable resistance to reform. The Government would be disinclined (and ill-advised) to tell the services how to do their job. 

Reforms like those discussed above must, therefore, be generated by and find acceptance within each service with the specifically focused objective of re-investing the savings in modernization or upgrades. Until a better answer emerges, this seems to be the only realistic way to cope with ‘logically-uncertain’ defense budgets.

This article first appeared in the India Defence Review and has been reproduced here with the permission of the Editor.