New Delhi, 05
May 2003
India’s
Defence budget 2003-04 stands at $14bn (including $1.8bn unspent in
2002). Last year when the Indian Parliament hiked India’s Defence
estimates by 15% to $13.8bn, there was rejoicing in the Armed Forces
who hailed it as the “Silver Bullet Budget,” which would lead to
modernisation, especially for the Army and Navy which had witnessed
years of neglect. Services headquarters had thoughtfully crafted the
demands, after taking into account urgent operational needs
including imports. However one year later in March 2003 the Defence
Ministry was compelled to surrender $1.8bn as unutilised.
The
official explanation tabled in Parliament was that a sum of $543m
was saved under the revenue head mainly under stores, and $1.3bn
remained unspent from the capital head mainly under aircraft, aero
engines, other equipment and Naval Fleet. This amount was carried
forward in the current $14bn budget.
The
steps to streamline procurement, improve combat readiness including
nuclear and intelligence aspect through the newly formed Defence
Procurement Board, and the proposed Chief of Defence Staff structure
have been slow starters with political inaction, and inter-service
rivalry derailing all good intentions including those for imports.
A
former Vice Chief of Staff, and a member of the National Security
Advisory Board stated. “The Defence Budget of a Nation in a
democratic country is the only voice for the operational needs of
the Armed Forces. If it is not properly monitored, then the system
stands failed and operational capability is likely to suffer. The
previous year’s budget was either flawed, or the Armed Forces were
denied what they asked for.” The truth is probably the latter.
It is in this context that
India’s Defence Budget 2003–04 deserves analysis. Most major
decisions on foreign purchases for the Army, which include the 155mm
Howitzers, SMERCH batteries and modern EW and communication systems
appeared to have been held back, though 3400 rifles were imported
from Israel.
The Navy still awaits the final
clearance for its 6 Scorpene Submarine building programme at MDL,
for which the yard has already been funded. The acquisition of
Gorshkov and MiG 29 Ks seem bogged down on costs, and appear to be
linked with the supply of two Akula class nuclear boats and 4 TU 22M
MR nuclear capable bombers.
The IAF has been struggling for 15
years, to conclude the 66 Advance Jet Trainer (AJT) deal worth
$1.3bn. The Czech firm Aerovodochy has offered the L 159 B with the
Honeywell F124 engines at a cost of $400 million less than the
preferred Hawk 115 deal, with Boeing entering the fray for co-
production with HAL. Interestingly funds remain earmarked for all
these projects and all other equipment, but the political and
bureaucratic hurdles are still difficult to surmount. Many of
DRDO’s programmes, like the short range Trishul SAM, have not
fructified and in other cases time schedules indicated to the
Services could not be met, precluding import of substitutes in time.
The
Budgetary System and Process
The Defence budget is tabled in
Parliament along with the National budget on 28th
February every year after reviewing the requests received from the
Armed Forces and funds are provided under five Main heads. Four are
on Revenue Account (one each for the Army, Navy, Air Force and
Ordnance Factories). These cater for the operating costs of the
Services including pay and allowances, stores, ordnance, fuel and
inescapable operational and predictable costs.
From 2002 under a directive called
the New Revenue Financial Management Strategy first attempted for
the Master General of Ordnance, the scheme has been extended to the
three services with vastly delegated powers. During the mobilization
of the Armed forces in 2002 in OP Parakarma, the system on the
revenue account worked well and operational deficiencies were made
up. Each service is now permitted to replenish or repair an existing
system, but under the fifth head Capital Account, the Services are
totally at the mercy of the bureaucrats in the Ministry of Defence,
whose procedures are cumbersome and dilatory, even for minor
acquisitions.
To clear an import, the DRDO and
various other Defence boards have to concur that the item cannot be
indigenously made, while in larger purchases clearances are required
from the vigilance agency, nominated eminent persons group and the
Cabinet. It is for this reason that outlays on capital works,
purchases of vessels, aero-engines and aircraft, plants and
machinery have had to be deferred.
For better accounting a new head
Defence Research and Development has been separated from the Army to
oversee and control DRDO projects. For 2003, the DRDO has been
provided $596 million for their revenue account and $198 million for
capital expenditure and this possibly includes a provision for the
Anti Ballistic Missile Defence system being planned with Green Pine
radar, indigenous equipment and imports, besides the on going Agni
missile, radar and other projects like the LCA.
Indian Army
The Army has been allocated a total
of $7.5 billion, which is 53% of the defence budget, and $6.2
billion is under the revenue head which includes $2.8 billion for
pay and allowances for the 1 million strong uniformed force and
civilians. $2.7 billion stand earmarked for stores, ordnance and
works and the balance for transportation, inspections, auxiliary
services and the Rastriya Rifles, (the Infantry arm that is deployed
in terrorist infected Jammu and Kashmir). The Government had earlier
stated that it would fund this arm, which spends $240m per year,
from the Home Ministry budget.
The capital account for the Army is
only $1.2 billion and will possibly cover the cost of import of UAVs,
the 155mm gun project, SMERCH batteries, Prithvi Missiles, SAM
systems, radars and the helicopters (including Lancers, Cheetahs and
ALH to be supplied by Hindustan Aircraft Ltd) and other
communication and ancillary equipment. The Army is short of 12,000
junior officers and when that shortage is made up the revenue
account will swell. The Army has shelved its plans to reduce its
strength.
Indian Navy
Ever since the Indian Navy’s
combined fleets successfully executed the classical Naval maneuver
off Pakistan and threatened to blockade Karachi, during the Kargil
war in mid 1999 and contributed to the early capitulation of the
Pakistan Army, there has been greater understanding of its role in
war and peace. The US–India naval cooperation in the Indian Ocean
for patrolling post 9/11, further ensured that the Navy’s needs
for augmentation were met. Hence the Navy’s share of the defence
budget for 2003 has increased from 14% to 18% amounting to $2.6
billion. The revenue allocation of $1.1 billion includes, $296
million for pay and allowances for the 63,000 uniformed and almost
equally large civilian force in dockyards. Stores and ordnance are
set to consume $466 million and an allowance of $76 million has been
designated for the Joint Staff, which possibly includes the cost of
the Andaman Joint Command and CDS structure. The figure is
surprisingly high and could include nuclear command and control
facilities of the strategic force, since Air Marshal TM Asthana had
been appointed as the SFC. Other military nuclear assets or aspects
like the ATV project are not mentioned specifically in the budget.
The increased capital allocation of
$1.54 billion for the Navy presents an interesting analysis as the
service is all set for expansion. The 15 year plan for ship building
was approved by the Government to raise the strength of ships from
135 to 185, which to many analysts appears an over optimistic
target. It is the slow process of ordering and construction that
deserves attention. The construction of three Type 17 frigates (INS
Shivalik, Satpura and Sayhadri ) at Mazagon Dock has been
accelerated and the first was launched in April, while the
repeat order for the three Delhi Class Type 15A and three Type 15 B
ships is also on track at MDL. The 6 Scropene submarines are
also to be built at Mazagon Docks, which was allocated $256 million
compared to only $46 million in 2002, and the French Defence
Minister was in India in end April to hasten matters. This indicates
expansion of orders and the challenge will be whether the yard can
absorb so much in one year, as final decisions are still pending.
Garden Reach Ship Builders and
Engineers. Ltd at Kolkutta, which is to build the two large LSTs and
deliver the Type 16 Beas and Betwa frigates, has been allocated $71
million. The Cochin Shipyard, which has bagged the firm order for
the 37,000-ton Air Defence Ship (Aircraft carrier) whose steel is to
be cut this year, has been allocated $39 million. The Indian Navy
disbursed $ 272 million in 2001, $229 million in 2002 and has
allocated $266 million for 2003 to the Russian yards for the 3
Severnoye designed Krivacks of Project 1135.6 and Kilo class
submarine upgrades and for retro fitting Klub missiles.
Interestingly a sum of $412 million has been depicted as “purchase
of Naval vessels from other sources” and could include the payment
for two DSRVs the Navy has tendered for, advance payments for
Gorshkov, one FAC from Ramta Israel and acquisition of Air Cushion
Vehicles when these materialise. The Naval aviation and aero engines
and other equipment have been allocated $225 million and the
Navy’s RFI’s are out for acquiring Maritime Reconnaissance
aircraft with preferences from USA (PC 3 Orions), Russia (TU 142 and
TU 22M) while HAL will supply the Dorniers, Chetaks, and ALH and
upgrade the Dorniers with ELTA radars. It is evident the Navy’s
and the shipyards’ work for 2003 is cut out and will need speedy
decisions by the Government and speedier implementation, as funds do
not appear to be the constraint. The new Naval port Seabird has been
allocated $65 million for construction of jetties, while Naval
Dockyards have been allocated $32 million for retaining walls and
augmentation for which tenders have already been floated.
Indian Air Force
The Indian Air Force budget for
2003 is set at $3.4 billion, which has come down to 23% as against
25% allocated to it in 2002. The IAF revenue budget for a 110,000
strong service is $1.9 billion and the capital budget is $1.5
billion. The IAF operates the VIP transport squadron and receives
revenue for services rendered, and new aircraft are due to be
inducted. Boeing and Embraer Legacy are mentioned. The pay and
allowances head is allocated $471 million while air stores, aero
engines, ordnance and POL are expected to consume $1.2 billion. A
head “special projects” and other expenditure has been allocated
$29 million which is interesting as at present the major nuclear
deterrent is the IAF responsibility, and may be it is for this
facility. In the case of Capital allocation the largest component is
kept for aircraft and aero engines at $1.3 billion. The IAF is
awaiting clearance for the 66 AJTs and will incur payments for the
additional IL 78 tankers, Israeli Aerostats, Phalcon system, UAVs
and the SU 30MKI project, besides payments to Hindustan Aircraft Ltd
for purchases of aircraft and helicopters and MiG upgrades and Mi-17
purchases.
Coast
Guard
The 5500 strong Coast Guard,
India’s youngest service which operates 53 ships, 24 Dornier
aircraft and 18 helicopters proved to be up to the task of looking
after economic security off the coasts of India. The CG is becoming
less reliant on the Navy for manpower and has developed a philosophy
of carrying out repairs to its ships from civil yards and
contractors, and at times at remote places where their ships
operate. This has proved to be economical. the Ministry of Finance
traditionally funded the Coast Guard but the funds were controlled
by the Joint Secretary in the MOD. This year as a departure it is
budgeted under the Defence Head of Civil Estimates and has received
an appropriation of $142 million. This will cater for its revenue
expenses and its acquisition programme of two large and two small
OPVs from Goa Shipyard, Griffon Hovercraft from GRSE, placement of
orders for two pollution control vessels, two Dorniers and four
helicopters and possibly two surveillance aircraft. The ATR-42 has
been shortlisted. The Dorniers will see progressive replacement of
the Super Maec radars by the ELTA maritime radar. The Coast Guard
shortage of Dornier pilots is being made up by the IAF.
Conclusion
Once again the Government of India
has adequately funded the defence forces for all their requirements,
but the proof of the pudding will lie in how swiftly the sanctions
are accorded and programmes for acquisition and construction are
monitored. If decisions are delayed by the bureaucracy and
politicians it will once again not be possible for the armed forces
to fully utilize the capital allocations. The government has also
stated that its nuclear deterrent is in place, and recently the
fromer DRDO Adviser K Santanam allayed fears and doubts at the Gen.
Sinha memorial lecture by Raja Menon at USI, by explaining the
yeilds and readiness pattern of India's nuclear arsenal under
scientists control, but the budget projections are silent on this,
and are possibly buried somewhere in the above figures.
(Courtesy Asian Military Review)
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