Although the total defense allocation has increased, it has decreased as a percentage of GDP
By Vikas Gupta
Defence News of India, 4 Feb 22
In a perception management exercise that accompanied the Union’s annual budget on Tuesday, the Ministry of Defense (MoD) sought to publicize that it had significantly increased defense allocations and created the political conditions necessary for the development and prosperity of the national defense industry. In a series of upbeat press releases, Defense Minister Rajnath Singh’s formidable public relations apparatus laid out the following factual points: First, of tOut of the total government expenditure of Rs 39.45 trillion in the Union Budget 2022-2023, the Ministry of Defense was allocated Rs 5.25 trillion or 13.31% of the total government expenditure. There was silence that – even as Chinese People’s Liberation Army (PLA) troops continue to squat the territory we claim as our own – this was the lowest percentage allocation since the 1950s. Moreover, as a percentage of gross domestic product (GDP), the defense allocation stood at just 2.03%, threatening to fall below the 2% threshold.
Second, the Ministry of Defense announced that military modernization and border infrastructure development were central to the national security and defense planning process. To back this up, the Ministry of Defense pointed to the steady increase in defense capital expenditure from Rs 86,740 crore in 2013-14 to 1.52 lakh crore in 2022-23 – a 76% increase over a period. nine years old. While that sounds like a healthy growth rate, it’s actually less than 5%, compounded annually — barely enough to keep up with inflation and exchange rate swings.
Third, in a highly publicized push towards indigenous defense contractors under the “Aatmanirbhar Bharat” (Self-Governing India) scheme, it was announced in the Union budget that 68% of all defense capital purchases would be reserved for local manufacturers. In 2021-22, the MoD had earmarked 58% of all capital purchases for Indian entities. The enhanced target will, however, prove difficult to implement and control, as an order placed with a domestic defense manufacturing entity could very well be placed, as sub-orders, with foreign entities. For example, an order of Rs 1,000 crore, placed on the indigenous entity “Company A” could be fulfilled by this company with a foreign component of 50% which would be difficult to track.
Another initiative the Ministry of Defense dealt with in the Union budget was the management of seven new Defense Public Sector Enterprises (DPSU) which were created as a result of the ‘corporatisation’ of factories of artillery. This required allocating a sum ofRs 1,665 crore in Revised Estimates (RE) 2021-22 and Rs 1,310 crore in Budget Estimates (BE) 2022-23 for their planned modernization. Additionally, Rs 2,500 crore has been set aside in BE 2022-23 and in RE 2021-22 as emergency authorization funds.
The only one of the three services that has received a significant increase in its capital allocation is the navy. In a long-awaited recognition of the importance of maritime security, the Navy’s capital budget has been increased by around 43% from an allocation of Rs 33,254 crore in the financial year 2021- 22 to Rs 47,591 crore in the financial year 2022-23, an increase of Rs 14,337 crore. This increase will be necessary to support the acquisition of new platforms, such as six air-independent propulsion (AIP) submarines being acquired under Project 75-I, a second aircraft carrier (IAC-2), 57 deck-based twin-engine (TEDBF) and four other P-8I Poseidon long-range maritime patrol aircraft to survey the Indian Ocean. The Navy is also creating operational and strategic infrastructure that will be needed when the Tri-Service Maritime Command is operational at Karwar, near Goa.
Along with the build-up of naval combat assets and infrastructure, there is growing recognition of the need to strengthen coastal security and policing to prevent intrusions into coastal cities and ports that could lead to more incidents. terrorists such as the 26/11 strikes in Mumbai. In line with this, the Indian Coast Guard’s capital budget has been increased by Rs 2,650 crore in FY 2021-22, by more than 60% to Rs 4,246 crore in FY 2022- 23. This will provide the necessary means to constitute means such as offshore patrol boats, maritime reconnaissance ships and aircraft, the establishment of a coastal security network and the constitution of technical and administrative support structures.
Furthermore, the investment budget of the Border Roads Organization (BRO) has been increased by 40% from Rs 2,500 crore for the current year to Rs 3,500 crore for the financial year 2022-23. With an eye on the Chinese, this aims to speed up the creation of important border roads, bridges and tunnels, such as at Sela and Nechiphu. In 2021, BRO executed a record 102 roads and bridges in extreme altitudes and weather conditions. This includes the world’s highest motorable road at Umling La at an elevation of 19,024 feet.
Another boost for defense R&D is the allocation of 25% of the Defense Research and Development Organization (DRDO) budget to engage industry, startups and academia. DRDO’s capital budget allocation is up 5.3% from Rs 11,375 crore in BE 2021-22 to Rs 11,981 crore in the current year, only kicking inch limited to indigenous R&D projects.
DRDO has several modes of engagement with industry and academia. It engages industry as a Development and Production Partner (DcPP), Development Partner (DP) and as a Producing Agency (PA) when delivering projects and programs. Currently, the DRDO engages approximately 20,000 industries of various sizes in the development of various systems, subsystems and technologies, directly and indirectly. Through its Technology Development Fund (TDF) program, DRDO extends its financial support to Indian micro, small and medium-sized enterprises (MSMEs) and startups for the indigenous design and development of technology products, components and subsystems. defense. The fund is used to develop new technologies according to the needs of DRDO, services and DPSUs.
The DRDO works with more than 250 academic institutes on various defense R&D issues for fundamental, applied and targeted research. It has established 10 advanced research centers in various academic institutions. The DRDO has also proposed to establish chairs for specific fields in various universities for long-term engagement with academic institutions.
At the macro level, the stabilization of personnel costs – which includes salaries and pensions – is to be welcomed, as this will allow more money to be allocated to upgrading equipment. The army has even more leeway to reduce its bloated numbers through organizational reform. This process was ongoing, but was interrupted by the tragic death of the first army chief of staff, General Bipin Rawat. It must now be resumed without further delay.
