The Hindu : National : Higher defence outlay likely

Online edition of India's National Newspaper
Saturday, Feb 26, 2005

National

National

Higher defence outlay likely

By Sandeep Dikshit

NEW DELHI, FEB. 25. The die for an increase in the outlay for defence was cast a day after the United Progressive Alliance Government presented its first vote-on-account in July last year.

Despite a Rs. 12,000-crore increase for purchasing military equipment, the Defence Minister, Pranab Mukherjee, complained of a shortfall.

Most of the allocation for capital purchases would be spent to honour the contracts signed by the previous regime. There would be nothing left for the new Government to spend on, he said.

The new Government was working on the logic that defence and development were not mutually exclusive. The aim of military spending is to `secure' the environment for the benefit of the citizen and the State and catalyse development. What has, however, been contentious is the question, "How much is enough?"

Defence spending

In statistical terms, defence spending hovers at a low of 2.5 per cent of the gross domestic product (GDP) but in absolute terms, the 2004-05 allocation of Rs. 77,000 crores for the defence sector is a lot of money for a developing country. However, Mr. Mukherjee appears to have successfully argued that it would be misleading to arrive at conclusive inferences by calculating defence expenditure as a proportion to the GDP. Each country faces unique security challenges, and conditions to face them will vary from country to country.

As a result of this reasoning, the defence outlay is set to go up again to meet the military's equipment wish list that has been partially fulfilled despite the Centre spending nearly Rs. 1,00,000 crores over the past four years and failing to spend over Rs. 22,000 crores.

Focus on ex-soldiers

At the UPA-Left Party coordination committee meeting this week, Mr. Mukherjee indicated that the increase would not be restricted to the capital account alone. The outlay for revenue expenditure, which has risen by just 10 per cent in four years, needs to be given a closer look.

The retired soldier and the dependents of the one who dies with his boots on have been by and large neglected.

The previous Government set in motion a revamped health scheme for both. With the projects beginning to take off, the UPA Government will have to make suitable allocation in the revenue accounts to maintain the tempo of this ambitious all-India scheme.

Another challenge before the Government in the revenue account is the downsizing of the armed forces. While acquiring superior technology at high cost, it is axiomatic that some fiscal pruning should be achieved by cutting down on manpower costs. The Budget is likely to gloss over this aspect but capital expenditure will continue to occupy centre stage.

This is because the UPA Government has accepted the previous regime's logic for increasing capital expenditure — all gaps arising out of the two security challenges facing India, internal and external, must be plugged.

In line with this theory, all the three services have received modern military equipment but they are still yearning for more to make up for the lost decade of 1988 to 1998 when little or no modernisation took place.

Military wants more

As a result, after finalising orders for naval destroyers, jet trainers, tanks, counter-insurgency equipment, mid-air refuellers, an aircraft carrier with its complement of planes and helicopters, the armed forces are still looking for more. All the items will be imported and carry a hefty price tag.

They include 126 multi-role fighters estimated to cost over Rs. 10,000 crores, submarines for an equal amount, multiple rocket launchers, plane-based radar systems, light helicopters for extremely high altitude operations and artillery guns.

These items are in various stages of procurement. The submarines are as good as bought, the selection of artillery guns is mired in trials and re-trials, the fighters would see intense pressure by the Governments of France, the U.S. and Russia and the light helicopters are still undergoing trials.

While a big portion of the capital outlay for the next fiscal would be earmarked for phased annual payouts for items bought earlier, the rest would be apportioned for new purchases.

Flawed purchase system

Though the UPA Government might claim it was the first government to completely spend the capital outlay for the defence sector for the first time since the Kargil War, it knows that the claim is flawed. As Mr. Mukherjee admitted at the outset, most of the contracts were signed by the previous dispensation.

The present Government only had to sign the checks. Its test will be how fast it finalises purchases that are in the pipeline. But the purchase procedures are still time-consuming.

The same set of middle-level bureaucrats who procrastinated over the files during the previous Government is now in the top echelons of the Ministry. Realising that their previous exercise at speeding up purchases was a failure, they have announced a review and promised refined procedures shortly. Its success or failure will be judged in the next Budget.

Printer friendly page
Send this article to Friends by E-Mail

National