Defence Budget: Loosen purses strings while tightening belts!

The presentation on the Union Budget, 2021-22, in the Indian parliament on 01 February, 21, is going to be historic. For the first time in the history of India, the budget will be presented in a paperless format. It will be distributed in digital format to the Members of Parliament and supported by a 'Union Budget Mobile App' for hassle-free access to all 14 Budget documents including the Annual Financial Statement, Demand for Grants (DG), Finance Bill etc. Over and above the technology driven intervention, the nation is waiting eagerly for the governments initiatives in the defence sector and in furthering the concept of Atmanirbhar Bharat, where also the defence sector has a major role to play.

 

In the preceding year India has witnessed enhanced security challenges along its frontiers with two inimical neighbours. Pakistan has not relented from its Proxy War and attempts to keep Kashmir unstable through infiltration of terrorists. Alongside, tensions have escalated along the Line of Actual Control (LAC) with China from Ladakh to Sikkim and Arunachal Pradesh. The face-off in eastern Ladakh led to amassing of troops on both sides with India finally occupying some strategic peaks and gaining the upper hand.

 

 

 

Attempts towards resolution are on at the diplomatic and operational level. In a departure from earlier policies India is now unwilling to shed even an inch of territory along the LAC, for which reason, both sides have adopted hardened positions. There is a possibility of conflict escalation once the winters pass away. There is also a possibility of a two front threat with Pakistan and China joining hands to pressurise India. Under such circumstances the defence budget gains great importance and alongside does the concept of Atmanirbhar Bharat which will give indigenous defence capability to the country.

 

Defence production in India would come more appropriately under the Self Reliant Mission (SRM) which aims at cutting down dependence on defence imports and going for local production of defence hardware but without compromising quality and safety norms so important in this sector. The objective is to meet national requirements and also go for exports. The significance of such a course becomes quite apparent from the fact that India is the largest importer of arms globally. The government is very right in advocating a reduction in dependence on imported military equipment. It is hoped that the percentage of indigenous intake in defence hardware will increase through independent entrepreneurship as well as collaboration. Experts like DRDO Chief G Satheesh Reddy are already expressing hope of a perceptible increase in this direction in the next five years.

 

 

India already has a state of the art missile capability in place in all categories and platforms. In this sector DRDO chief predicts great momentum in export of indigenously developed missile systems to various countries. Government has already given approval for the same. A lot of momentum in Atmanirbhar projects was witnessed in the defence sector in the preceding year with induction of weapon platforms like the Tejas MK 1 fighter aircraft, Arjun Main Battle Tank, 155mm Self Propelled Artillery guns, third generation anti-tank missile (NAG), anti radiation missile( Rudram) etc. ISRO has been rated among the top five government space agencies of the world. It has deployed flexible launch platforms to complete the missile defence triad of the country and mastered cryogenic engines technology for launch of inter-planetary missions. The aforementioned is definitely an appreciable march towards self reliance.

 

 

The march towards Atmanirbhar mission in the defence sector can maintain momentum only if the defence budget provides the required resources to purchase what has been made. If orders are not forthcoming from the ministry of defence then no forward movement is possible. For this, an enhanced Budget becomes necessary. A larger case for an enhanced Budget is built by the critical threat to the nation from its inimical neighbours that has been explained above. In the present context a perceptible increase in the Defence Budget to about 4-5 percent of the GDP is necessary to meet the Atmanirbhar and security goals. Defence should no longer be looked upon as a static expenditure, it now has the potential to boost a growing economy with enhanced industrial production and the associated creation of jobs.

 

 

To meet the urgent one-time enhancement requirements, initiatives like cess in income tax, super profit tax on corporate sector, increase in capital gains tax to meet defence needs can be considered. It can be reasonably assumed that the nation will not fight shy of contributing to national security and will happily take on the additional burden. In the long term, India needs to look at a five-year plan that takes our defence allocation to beyond the 1.5% of GDP (ex-pensions) to 3%. NATO guidelines are for a minimum of 2% of GDP on defence, so a jump to an additional 1 percent to begin with would be ideal given our geographic reality.

 

Of course the Armed forces also need to respond with methods to reduce the revenue budget and cut costs. Certain progressive steps in this direction are already being taken; the three services are well on the way towards transformation from manpower intensive to technology intensive structures with full commitment Tri service jointness. These initiatives will need to be strengthened with infusion of capital as required initially but; the same will accrue long term fiscal benefits. There are earlier instances where massive overreaching outlays have been made for defence; one such instance was the Budget of 1963 that had a defence allocation of Rs 708.5 crore constituting a whopping 38 percent share out of a total budget of Rs 1852 crore. Now is the time for a similar bold step. Time being at a premium due to escalating security concerns, the adage should be "loosen purses strings while tightening belts." The nation cannot wait for years to see Atmanirbhar in defence taking off, it has to happen within this year.

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