The Bofors Effect

While it is one thing to make a political slogan out of trying to drum up support for getting a permanent seat in the UN, the variety of responsibilities it entails appears to have escaped the attention of the powers that be. 

 

On top of the list lies a saga of mismanagement and short-sightedness in the defence budgetary allocation system. With all wings of the military grossly ill equipped by international standards, themismanagement of funds becomes more worrying.Consider this. The Indian Air Force (IAF) is currently operating with 30 squadrons instead of the sanctioned 39, which is strange considering that it took 10 years for India to sanction 126 medium multi-roll combat aircraft. And the first aircraft is not even in sight.

 

The same is the case with the Navy. While China has raised a formidable underwater capability with more than 60 submarines, India is grappling, unsuccessfully, to keep its 11 submarines in running condition. Add to it a shortage of officers.

 

The defence outlay of 2012-13 constitutes 1.9 percent of the country's gross domestic product (GDP), estimated at Rs 101,59,884 crore. It was pegged at 1.83 per cent of the GDP in 2011-12 and 2.2 percent in 2010-11. Significantly, it is the second successive year when the defence budget is less than two percent of the GDP.Says Vice Admiral (retd) Pradeep Kaushiva, director of the National Maritime Foundation, New Delhi, “Compared to 3 per cent spent by developed nations, India's allocation is short by almost 30 percent. This lesser allocation will have a cascading affect and the focus will be to adjust things to make do with whatever is allotted and this takes the focus away from long-term planning.” It sure does.

 

In 2011-12, Prime Minister Manmohan Singh had accepted that the defence expenditure as a percentage of the GDP has been falling from year to year. While the allocation of Rs. 1,93,407 crore (about $40 billion) may show an impressive hike of 17.63 percent over 2011-12, on close scrutiny it is evident that the policy has veered towards meeting manpower requirements rather than the much-needed modernisation of the armed forces.

 

Of the Rs 1,93,407 crore allocated, Rs 1,13,829 crore has been allocated for revenue expenditure and Rs 79,578 crore for capital expenditure, which includes modernisation-related expenditure, a growth of 19.55 percent and 15 per cent respectively over 2011-12. The upward curve in terms of figures stops here.

 

By contrast, India's mighty neighbour and military machine China has announced a defence budget of $106.2 billion. With an increase of 11.2 percent, Beijing has fixed its focus to changing the complete profile of China's armed forces with a double-digit increase in its defence expenditure for over the last two decades.

 

China also has recorded double-digit increases in official military spending for each year since 1989 except for 2009, when the announced growth rate dropped to 7.5 percent. It is not surprising therefore that China has more than 60 submarines in its navy compared to India's 11.

 

Sadly, even the funds that have been allocated remain grossly mismanaged, as is evidenced by the huge amount of money which is sent back from the allocated amount (see box). In 2011-12, the amount returned from the allocation was a whopping Rs 3,055 crore and it would have been much higher had the navy not been allowed to overspend by Rs 2,801.25 crore. 

 

"In the past 10 years, the ministry of defence (MoD) has surrendered a cumulative total of Rs 358.85 billion with the Indian Navy being the only arm of the defence machinery which has been able to over-utilise from its allotted quota,'' says Laxman Kumar Behera, research fellow at the Institute for Defence Studies and Analysis (IDSA). 

 

In 2012-13, the money allocated for modernisation or capital acquisition is Rs 66,459 crore. While the focus on India's navy modernisation has resulted in an increased budget of Rs 24,151 crore for the navy, the IAF with an assigned sum of Rs. 28,503 crore has got a 0.5 per cent rise.The natural loser, however, is the Indian Army which has seen a clear decline of 3 per cent to Rs 13,804 crore. 

 

Critically, this is certain to hamper the army's modernisation programme. Their pleas for artillery guns, light utility helicopters and air defence guns have fallen on deaf ears. According to defence analyst Uday Bhaskar, “No nation can call itself a world military power unless it has good artillery guns”. Since the last ten years, the MoD has maintained that acquisitions will begin soon,but just how soon is unclear. The ghost of arms acquisition in general and of the Bofors howitzer deal in particular have cast their long shadow on the country's arms procurement policy. While the army has been making its demands, the civil bureaucracy in the MoD has tended to be overcautious in their approach. Says one official on condition of anonymity, "Most officials these days are apprehensive about signing on procurement policy. You do not know if ten years down the line the CBI lands up to ask you why you signed this or that document.''

 

For instance, tenders for the acquisition of helicopters have been passed twice but have been scuttled at the last minute proving that arms procurement post the defence scams that hit India in the 1980s and 1990s are bound to hinder the modernisation process. It is in fact linked to the larger issue of arms import. Up to 70 percent of Indian arms and equipments are imported. The reason behind this extreme dependency on foreign countries is the relatively small budget for research and development (R&D). 

 

The money allocated for R&D in 2012-13is a measly Rs 4,640 crore, which shows a paltry rise of just Rs 11.7 crore from the Rs 4,628 crore marked out in 2011-12. This too has come down from Rs 4,965 crores given in 2010-11.

Accompanying this directionless meander is the absence of will. As early as the 1980s, India had acquired the capability to manufacture diesel submarines and a full assembly line was in place. Since then nothing happened because officers who had picked up the desired skill sets moved on to other assignments in the absence of any credible work. 

 

Even today the much needed production ofScorpene submarines being built in the Mazgaon dockyard is late by three years, with the defence minister setting a new deadline of 2015. Six Scorpene submarines are being constructed and the cost of the project has been revised to Rs 23,562 crore from Rs 18,798 crore. But with political compulsions dictating the course of arms procurement, national security and strategic planning, the Indian defence sector's modernisation programme is out on a limb. 

 

Modernisation is an ongoing process which takes time. For instance, India spent six years in acquiring the skills to operate a nuclear submarine and started operating the Russian-leased nuclear submarine only in 1991.As a result, it would be 20 more years before India gets its next nuclear submarine for which a further four years have been devoted to training. Not the best situation to be in for a country which has global aspirations.