TOPIC:General Studies 3
- Government Budgeting in the Defense sector
In News: India is working hard to enhance its capabilities and capacities in the defence-manufacturing sector at a fast pace.
- There were hundreds of ordnance factories before independence with large-scale weapons export from the country in both world wars but this system was not strengthened.
- India is working hard to change the situation and also to enhance its capacities and capabilities at a fast pace.
- On the defence budget, a part has been reserved for domestic procurement even in the capital budget of defence. A total amount of Rs 4.78 lakh crore has been earmarked for the defence ministry in the 2021-22 budget, with a nearly-19-per cent increase in capital outlay.
- PM Modi has urged the private sector to come forward and take up both designing and manufacturing of defence equipment.
- India had made some advances in this area over the past few years but procedural bottlenecks were holding defence modernisation “hostage”. There are certain procedural lacunae in the procurement process, which primarily arise due to the overbearing nature of our rules and guidelines in trying to ensure zero error. The problem is also aggravated by our own interpretation of rules.
- Considering the quick pace of defence modernisation undertaken by our adversaries, we are lagging behind slightly. The continuous and heavy dependence on equipment of foreign origin needs to be addressed in right earnest through indigenous capability development.
- Tying to plug every loophole is causing delays in the process, it results in the acquisition process being tied up in knots and the processes and procedures have become paramount rather than the product and these are holding hostage defence modernization.
- Bureaucrats in the defence ministry with shallow knowledge of military requirements often sit on files for months. They are one of the biggest obstacles in the path to modernise India’s forces. The bureaucracies in the MoD and MoF have deservedly acquired a reputation for being dismissive of budgetary requests by the armed forces. Unless the military has permanent representation in the MoD, this situation will not change. And change it must: Indian’s national security, especially at the LoC and IB, is at risk.
- The key problem with India’s armed forces is civilian neglect over decades. In China, military officers are closely involved at every stage of weapons acquisition and modernisation. In Pakistan of course the Army sets its own inflated defence budget. Civilians play no role. India goes to the other extreme. The majority of the annual defence budget is swallowed up by salaries and pensions.
Soldiers complain of outdated assault weapons. Pakistan-sponsored terrorists killed in J&K are often armed with more sophisticated weaponry than the Indian soldiers’ weapons. Neglect extends to inadequate rations, poor living conditions in some Army camps and lax perimeter security. The terrain along the LoC is difficult to protect. But lack of modern firepower can affect troop morale. In contrast, Chinese troops across the Line of Actual Control (LAC) and Pakistan’s Army regulars carry advanced weaponry.
Measures taken by Government
Budget 2021: Big push for lean, mean and modern armed forces
Keeping in mind the tension along eastern Ladakh with China, the central government has shown an urge to upgrade resources through military modernisation. The allocation of defence budget for the year 2021-22 sees a significant rise towards capital expenditure.
Allocation for capital expenditure is Rs 21,326 crore, a rise of 18.75 per cent. Last year, the armed forces had to make emergency procurement and mobilise a massive 50,000 soldiers with weapons along the Line of Actual Control (LAC).
China had moved in its troops to alter the status quo along the LAC in Eastern Ladakh. High-altitude gears, missiles and armaments had to be bought on an emergency basis. The Air Force had also mobilised its strategic assets near the LAC.
- Total allocation for defence in budget 2021-22 is Rs 4.78 lakh crore, including defence pensions, which is a 1.48 per cent hike from Rs 4.71 lakh crore last year.
- Excluding pensions amounting to Rs 1.16 crore, allocation for 2021-22 stands at Rs 3.62 lakh crore.
- Capital allocation last year was Rs 1.13 lakh crore and it has risen to Rs 1.35 lakh crore this year.
This is a 7.34 per cent rise from last year’s Rs 3.37 lakh crore. The jump in capital allocation will give a push towards procurement of modern platforms and new equipment.
Another positive aspect was the assurance that the capital defence budget will be non-lapsable. As per the observation of the 15th Finance Commission, the expenditure on defence services as a proportion of GDP declined from 2 per cent in 2011-12 to 1.5 per cent in 2018-19 and to 1.4 per cent in 2020-21.
Indigenization in Defence
- The indigenization in Defence has not shown the leap forward required to support the Defence Forces. The Negative list was in any case simply the list which was on the anvil for indigenization by Defence Forces for the last decade or so. Overall, this highlights the lack of vibrant Defence equipment manufacturing within India. Surely, the Defence Procurement procedures (which are obviously tilted towards Defence), encourages induction of well proven and mature equipment for purchase after their due Tests and Trials.
- Even though the Capital allocation for DRDO has been increased to Rs 11,375.50 crore, indigenization efforts for large projects (like Tejas, Rustom UAVs, Arjun Tanks) through DRDO Labs have often been adversely impacted by various Transfer-of-Technology (ToT) shortcomings. Lack of acknowledgement of limited indigenization capabilities (be it Private agencies, DRDO, or OFBs) for Defence has impacted the Armed Forces’ preparedness. Dovetailing Defence modernisation with these Organisations may only leave the Defence forces wanting.
Plans to invest around $130 billion towards enhancing security by military modernisation in the next 7-8 years
- India has been trying to give a fillip to the domestic defence manufacturing industry and hopes to achieve $5 billion worth of exports by 2024.
- Events like Aero India will help in realising our twin goals of self-reliance and exports, and in attaining our target of achieving a turnover of Rs 1,75,000 crore, including export of Rs 35,000 crore in aerospace and defence goods and services, by the year 2024. India is inviting international players to establish their ventures in India for the purpose of peace, security, cooperation, coordination, balance and joint business interests.
The Defence Acquisition Procedure-2020 (DAP 2020) has introduced substantial amendments to provide for efficient and expedited procurement of defence technology and equipment, large incentive to the private sector-promising transparency and probity to the process. Private players are now providing large defence platforms like artillery guns, bridges, radars and a wide range of weapons and equipment.
In the past few years, the government has tried to reverse this trend, by boosting indigenisation and focusing on dual-purpose high-end technology. This approach will not only ensure self-reliance, it will also hold good during times of contingency. However, indigenous development alone cannot fill existing… operational voids due to lack of niche technology and manufacturing capability, and therefore there may be some inescapable need for a certain percentage of imports. Once cannot afford to have operational voids when the enemy is at the gate.
- Increasing security challenges due to India’s rising stature in the international community, apart from unresolved borders and revisionist adversaries have led to Indian Army being embroiled in protracted conflicts such as insurgencies and proxy wars. Continuous and concerted capability building of the Army through modernisation to address these security challenges therefore is a national imperative.
- Covid-19 pandemic has shown the fragility and disruptions of global supply chain and consequent effect on trade and economic growth. Self-reliance is the only way to insulate ourselves from such disruptions.
- Also, defence cannot be tied down by progress of the local industry to produce the military equipment and such an option can be detrimental on the Armed Forces’ edge to effectively handle rapidly modernizing adversaries like China.
Shekatkar Committee: Recommended measures to enhance combat capability and rebalance defence expenditure of the armed forces, submitted its report in December 2016.
- Optimization of Signals Establishments to include Radio Monitoring Companies, Corps Air Support Signal Regiments, Air Formation Signal Regiments, Composite Signal Regiments and merger of Corps Operating and Engineering Signal Regiments.
- Restructuring of repair echelons in the Army to include Base Workshops, Advance Base Workshops and Static / Station Workshops in the field Army.
- Redeployment of Ordnance echelons to include Vehicle Depots, Ordnance Depots and Central Ordnance Depots apart from streamlining inventory control mechanisms.
- Better utilization of Supply and Transportation echelons and Animal Transport units.
- Closure of Military Farms and Army Postal Establishments in peace locations.
- Enhancement in standards for recruitment of clerical staff and drivers in the Army.
- Improving the efficiency of the National Cadet Corps.