Defence Budget 2015-2016

Photo(s): By PIB, Boeing, US Army, BAE Systems
By Lt. General P.C. Katoch (Retd)
Former Director General of Information Systems, Indian Army


The Fiinance Minister has announced a defence budget of Rs 2,46,727 crores for FY 2015-16. This announcement has come in the backdrop of a few other defence related news items:

  • During Aero India 2015 Defence Minister Mohan Parrikar admitted that the defence procurement policy needed to be streamlined in order to facilitate Make in India in defence sector. Why this glitch still remains despite the Prime Minister's call for Make in India on 15 August 2014 raises questions especially when global arms majors are so very keen to respond to the PM's call.
  • The Defence Minister recently informed the Parliament that the Army, Navy and Air Force have placed orders Rs 83,858 crores during fiscals 2011 to 2014 for procuring arms, weapons and other defence-related systems (IAF - Rs 55,406 crores, Navy - Rs 25,454 crores and Army - Rs 2,998 crores through foreign firms). But then these are statistics that are hardly reassuring considering the state of modernization of our Armed Forces and the defence-industrial complex.
  • Defence minister also said 144 companies have been issued licenses and letters of intent for manufacture of military hardware in the last 14 years, and 29 joint ventures and FDI proposals have been approved. Again hardly reassuring considering the state of modernization of our Armed Forces and the defence-industrial complex.
  • Government has approved Rs 8,300 crores for OROP in the FY 2014-2015 defence budget and the scheme is reportedly under implementation. This will fulfill a long standing promise and would help reduce or negate surrender of funds in the current fiscal, which as per inside sources in end 2014 was estimated at about Rs 12,000 crores.
The Union Minister for Finance, Corporate Affairs and Information & Broadcasting, Shri Arun Jaitley departs from North Block to Parliament House along with the Minister of State for Finance, Shri Jayant Sinha to present the General Budget 2015-16, in New Delhi on February 28, 2015.
CH-47 Chinook
M777 Lightweight Howitzer

Coming to the announcement of the defence budget of Rs 2,46,727 crores (US$ 40 billion) for FY 2015-16 against Revised Estimates of Rs 2,22,370 crores for the year 2014-15, the increase is Rs 24357 Crore or 10.9% from the Revised Estimates and Rs 17727 Crore or 7.74% from the Budget Estimate of Rs 229,000 Crore announced in July 2014 by the same Finance Minister. Unfortunately, the announcement of Rs 2,46,727 crores as defence budget for FY 2015-2016 will not amount to much considering the fall in the value of the rupee against the US dollar vis-à-vis continuous rise in prices of arms and weapon systems that are imported. Yes Make in India will eventually catch up but the long gestation period cannot be ignored and in the interim and the pathetic state of Armed Forces modernization too cannot be ignored in the face of mounting threats to national security. When General Charles de Gaulle became President of France in 1959, France was militarily not very strong. Though France was member of NATO, the Commander in Chief of the NATO forces was even prohibited from revealing to national authorities like the French President, which bases in their own countries housed the Alliance's nuclear weapons. What de Gaulle ensured was that the Defence Budget of France was to ensure defence allocations remained greater than 2 percent and touching 5% of the GDP, resulting in France emerging as a militarily strong nuclear power. That trend has continued with current French military expenditure standing at 5.4% of the GDP. In India, though the Long Term Integrated Procurement Plan (LTIPP) is based on a hypothetical 3% of GDP, defence allocations have never really touched that mark. Even post the Kargil Conflict and public exposure to massive equipment shortages in the Army, the one time high 1999-2000 Defence Budget allocation was made at 2.41% of the GDP. However, there has been a downslide since then, not to talk of the thousands of crores of Rupees that were surrendered by MoD annually barring an odd year when budgetary allocations were fully utilized.

The close interrelation between economy and security of any country is an accepted fact. Both need to be fine-tuned. The rising threats particularly from China and Pakistan too need to be taken into account. We need to take a cue from the record US$ 42 billion of Japan in face of Chinese aggressive posture — that we too face. Logically India should have a defence budget of 3% or more of the GDP for next few years. Sure, India can become a global manufacturing hub for arms and defence equipment but as mentioned above what of the interim period. The bottom line is that an allocation of Rs Rs 2,46,727 crores for FY 2015-16 is disappointing and does not augur well for the government's commitment to defence modernisation. The 'India First' commitment of the present government is unquestionable but how is the Defence Budget allocated and how is the long term integrated procurement plan (LTIPP) chalked out in absence of a National Security Strategy, without defining National Security Objectives and without a Comprehensive Defence Review? This vital anomaly in India's defence setup cannot be resolved unless the higher defence structures of India are remodeled and military professional brought into the MoD and the defence industrial complex. Unfortunately, the government has made no move in this direction yet.