Budget 2018: Why defence budget should form 3-4% of GDP to cater to capital expenditure

The defence Budget for the year 2017- 18 was Rs 2.74 lakh crore, which amounts to 1.56 percent of the Gross Domestic Product (GDP). According to defence experts, this was the lowest-ever Budget allocated to defence forces in terms of percentage.

Speaking to Firstpost, defence expert Air Marshal (Retd.) Kapil Kak said with regard to Budget 2017, “This financial year’s Budget was the lowest since 1956-57. At the time of China war in 1962, we were going at 1.59 percent and for the next 30 years after the war we maintained the average of three percent of the GDP. From 1992 onwards there is a steep downfall in the defence Budget.”

Defence Budget is utilised to meet revenue expenditure and capital expenditure. India is a growing superpower which is surrounded by arch rivals Pakistan in the west and China in the north. In addition to this, India has to fighter terrorism and insurgency, so defence Budget must fulfill all the needs of our defence forces.

Now let us look at the needs of our Defence Forces. If we talk about the Army, Indian Small Arms System Rifles (INSAS) needs to be replaced with modern assault rifles. Currently army is using AK – 47’s and INSAS. The personal kit of an Indian soldier, which includes bullet proof jackets, helmets and shoes needs to be replaced with lighter kit.

Defence analyst Mandeep Singh Bajwa said, "The army doesn’t have modern assault rifles, steel helmets and bullet proof jackets. In addition to this, we also need to strengthen our Mountain Strike Core. The Indian army rely mostly on Russian built T-72 and T-90 tanks . The army needs indigenous built tanks to fulfill the gap. Indigenous built Arjun Mark II is still in trial phase, though this main battle tank has more fire power as compared to Russian tanks. We need artillery guns as our main artillery gun Bofors has become outdated."

Representational image. AP

Defence experts Maj. Gen. (Retd.) GD Bakshi said, "We need to plug the gap in the artillery. We haven’t had a gun since last 30 years ever since the Bofors scandal hit us.”

If we talk about the Air Force, the picture is not too bright either. There is a major shortage of fighter jets. Currently we have 33 squadrons of fighter jets, whereas IAF need to have at least 42 fighter squadrons.This figure will reduce further as Mig fighter jets will be decommissioned over the coming years.

The government has signed deal to procure 136 French fighter jets, Rafale, 36 of these fighter jets will be delivered by 2019 in the ‘ready to fly’ and rest 90 of them will be manufactured in India by Hindustan Aeronautical Ltd. The induction of indigenous built Tejas will also narrow the gap, but this aircraft needs improvement to match the requirements of IAF.

IAF is also thinking of buying American fighter jets F-16 or Sweden’s Gripen to increase its strength.

There is a tremendous shortage in the allocation of capital expenditure to the Airforce. Even if we induct more aircrafts, we don’t have proper infrastructure to keep them. According to anonymous defence sources, “Runway resurfacing needs to be done, aircraft hangers needs to be build, which requires a lot of funds. The work is getting stalled due to the lack of funds. Minimum RS 700-800 crore is needed to build proper infrastructure. We have bigger carry over liability in year 2018-2019, so the works are going to be stalled.”

According to Air Marshal (Retd.) Kak, in the financial year 2016-17 only 12 percent of the capital expenditure was used for the modernisation which went into new schemes, rest 88 percent of the capital expenditure was used to payback old liabilities.

The picture is also gloomy in the Indian navy. There is a shortage of submarines. We have currently 14 submarines in operation; half of them have completed their 75 percent of the service. INS Kalvari has been commissioned into the navy under project-75 and five more submarines will be inducted under the same projection the coming years.

Senior defence analyst Commodore GJ Singh said,”We need to have at least 24 submarines. Currently we have only one aircraft carrier along the western coast, but we need another air craft carrier along the eastern coast also. If we want our navy to be a ‘Blue water Nay’, attention needs to be paid on the modernisation of the navy,” he said.

Construction of 12 mine countermeasures vessels are also pending at Goa Shipyard Limited (GSL). There is delay in importing 16 medium multirole helicopters of 12 tonne each. Our navy requires a replacement of obsolete cheetah helicopters.

These are some of the major requirement by the three wings of our defence forces.

Defence Budget in 2016-17 was Rs 2.58 lakh crore which amounted to 1.71 percent to the GDP. The important thing to note is that, almost Rs 6,000 crore was surrendered to the government.

The defence Budget of the financial year 2017-18 was hiked by 6 percent from that of the previous one. If we talk about the coming Budget of 2018-19, defence experts are of the opinion that it should be around three to four percent of the GDP. Defence analyst Bajwa said,”Defence Budget should be four percent of the GDP to cater to the capital expenditure in terms of buying new weapons and equipment which at the moment is very very discouraging.” Air Marshal (Retd.) Kak estimated the Budget to be minimum three percent of the GDP.

While speaking to Firstpost, Bhartaiya Janata Party’s (BJP) national spokesperson Krishna Sagar Rao said,”There must be a possible rise of two percent i.e. eight percent hike on the previous year’s (2017 – 18 ) Budget allocation. This is only an anticipation.” Rao further added,”The increase of eight percent in the Budget outlay can also be enhanced as multiple defence panel recommending that it should be around 2.5 percent of the GDP.”

Talking on the issue of underutilisation of the capital expenditure Rao said,”There is an issue in terms of modernisation expense. This expense is not fully consumed year after year. Almost Rs 6000 crore was not spent in the financial year 216-17. This year we are focusing on full utilization of the modernization expenses.” The BJP spokesperson also signals that large scale acquisition of fighter jets and submarines are in the pipeline.

According to defence experts, this year the government will be under pressure. This will be the last full Budget as elections are approaching in 2019. There are chances that the government will spend more money in social sector. The government will want to bring fiscal deficit under control, so in that case limited Budget will be allocated to defence.

It will be interesting to see how the government gives priority to modernise the defence forces in the Budget or will appease the voters?

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