The Telegraph
Since 1st March, 1999
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- Once again, the budget has cheated the services of their modernization funds

The author is a retired air marshal of the Indian air force

The run-up to the budget this year has been far more telling than on any previous occasion. The publication of the Kelkar panel report on direct and indirect taxes had much to do with this. Undoubtedly, it was meant as a sounding board to help mandarins in the North Block fine-tune their budget proposals. In the widespread debate that followed, there appeared general agreement that assembly elections later this year with parliamentary elections to follow, would ensure that the budget would be people-friendly to keep the electorate in good humour.

Once this debate had run its course in the print and electronic media, another budgetary balloon was floated. It was reported that the ministry of defence had been asked to surrender between Rs 6,500 crore and Rs 10,000 crore from its budget allocation for the financial year 2002-03 in an attempt to address the fiscal deficit. It was even reported that, being unhappy with this development, the three chiefs of staff had met the finance minister and were assured that such surrender would not come in the way of their modernization plans, as such plans were spread over the five year plan period.

This logic has fault lines. Annual prioritization by the services reflects an operational need. Deferring modernization for fiscal convenience merely prolongs operational voids. Parliament only approves annual budgets; therefore there can be no commitments beyond, only intentions. A cynical serviceman could well ask what is to prevent this logic from being stretched from a five-year plan to a fifteen-year perspective one. If the idea of the North Block was to test the public mood on the surrender of defence funds, it must have been delighted at the muted response. Apart from isolated security commentators expressing concern, there was barely a ripple.

The finance minister’s latest budget reveals that the revised estimates of the ministry of defence for the fiscal year 2002-03 are expected to be Rs 9,000 crore below the allocated figures, close to what the media had predicted. There is every possibility that when the actuals are computed at the end of the fiscal year, this figure of the unspent amount could go even higher, as indeed was the case in the fiscal year 2000-01, when the actuals fell short of even the revised estimates by a huge Rs 4,800 crore. Even if this does not happen, the significant point to note is that the services will have spent Rs 56,000 crore in fiscal year 2002-03, an amount marginally lower than what was spent the previous year. This in spite of the burden of forward deployment.

By carrying forward the unspent amount of Rs 9,000 crore, the finance minister has been able to make the current defence budget allocations of Rs 65,000 crore appear respectable and in line with last year. In reality, taking inflation and exchange rate variations into account, the services will have less to spend. While a deeper analysis of the defence budget must await another opportunity, the irony of the repeated onslaught upon the military modernization process, notwithstanding the bitter lessons of Kargil needs emphasis while the hype created by the annual budget ritual is fresh in the public mind.

Ever since the Kargil operations, the services have been given ever-increasing budget allocations, with successive finance ministers promising even more should security compulsions so dictate: a hollow ritual meant to please national security sentiments without meaning much. The group of ministers set up after the Kargil committee had commented adversely on the existing structure for procurement. It had recommended the creation of a separate and dedicated institutional structure to undertake the entire gamut of procurement functions to facilitate a higher degree of professionalism and cost-effectiveness in the defence procurement process.

Thus was born the defence acquisition board three years ago. The services were fooled into believing that a combination of promised budgetary support and an effective procurement set-up would at long last pull them out of their prolonged modernization hibernation. They underestimated the depth to which the Bofors syndrome (or Tehelka or coffingate or...) had afflicted the system and the utter indifference of our polity, mandarins and, on occasion, even military bureaucracy, to matters of life and death to the fighting men in the field. If this year’s budget has one lesson for our fighting men and women, it is this. Fend for yourself as we have bigger issues like elections and voter sentiments on our mind.

The defence budget for the fiscal year 2000-01 was Rs 58,587 crore, an increase of Rs 13,000 crore over the previous year’s budgetary allocations, driven largely by the post-Kargil awakening that neglect of modernization of the armed forces had adversely impacted national security. Notwithstanding this, the armed forces ended up by surrendering Rs 8,965 crore. Since revenue expenditures are by and large committed, the bulk of this amount was from stalled modernization programmes. The defence budget for fiscal year 2001-02 was Rs 62,000 crore, an increase of Rs 3,413 crore over the previous budgetary allocations. Notwithstanding the unforeseen burden of forward deployment of our forces, the services surrendered Rs 5,323 crore. Undoubtedly the brunt of the unforeseen expenditure of forward deployment along with the unspent allocations came at the cost of modernization.

Now that the budget for fiscal year 2003-04 has been presented, we see that history has merely repeated itself from fiscal year 2002-03. Surrender of Rs 9,000 crore from allocations in spite of the burden of forward deployment can only mean further erosion of modernization plans. There were adequate signals emanating from no less than the defence minister that modernization plans of his ministry were not proceeding smoothly. The minister has himself, his bureaucracy and the services to blame, if among them they are unable to get their procurement act together.

Two examples that could not possibly have evaded the North Block’s notice are worth mentioning. The Indian navy’s purchase of the aircraft carrier, Admiral Gorshkov, its retro fitment and purchase of the aircraft complement, has been under intense negotiations for some years, yet it never seems to reach finality. Against the backdrop of intense media speculation that this deal would be finalized during the defence minister’s visit to Russia in January, the minister announced that the deal would be completed by March. An obvious indication that the project would spill over to fiscal year 2003-04.

Similarly, the advanced jet trainer, as even a schoolboy by now knows, has been under active consideration since (hold your breath) 1986. The defence minister has on more than one occasion indicated the imminence of this procurement. Addressing the press after inaugurating the Aero India show in early February, he mentioned that the project was awaiting cabinet clearance. Intriguingly, barely a fortnight later, he stated in Parliament that the project had not been finalized and that “such projects can not be decided in a hurry”. The irony of this comment surely cannot be lost on the seven successive Indian air force leaderships who have silently borne the adverse operational, safety and morale consequences of this intriguing delay, starting from the first, whose La Fontaine committee on flight safety initially stressed the need for an AJT in 1984.

There is as yet another irony. It is well known that the army lost close to 80 lives during the mining operations without a single enemy bullet being fired. Media reports suggest that the ministry of defence confirmed that lately, demining operations had to be suspended due to lack of safety equipment and that the file for procurement was kept pending despite the setting up of the much-hyped defence acquisition board. So it is not just the high visibility items, which seem to languish, but even relatively minor items like boots and specialist clothing that continue to cost us precious lives even in peacetime operations.

The ministry of finance must have been watching this rather lackadaisical performance within the defence ministry with more than a passing interest. Being involved in the processing of these cases, it is acutely aware of delays or problems within the ministry of defence. On occasion, as this writer can say from past experience, it may even have contributed to a little playful subterfuge for a larger budgetary cause. Or was it a larger inter-ministerial understanding towards enabling a voter-friendly budget' While it is hard to hazard a guess, one thing is certain, no blood is spilt in the corridors of the North and South Blocks. Merely of faceless soldiers, sailors and airmen too remote to stir any conscience in Lutyens’ Delhi.

It comes as no surprise that while the North Block was keenly observing the media debate on the Kelkar committee recommendations, it had already asked the ministry of defence to surrender modernization allocations that they knew could not be utilized. They then decided to test the waters of public opinion. Finding the going smooth, they sealed the fate of the services for the umpteenth time, confident in the belief that the services would come to heel. Ironically, a day before the budget was presented, a bill to allow proxy voting by the armed forces was passed in Parliament. Alas, if only the ever burgeoning ranks of our military corpses could also vote.

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