Surgical strikes were bandied about to score political brownie points. However, the defence budget did not reflect the government’s seriousness about equipping the soldiers with gear and latest wherewithal. It is time that the Prime Minister and the Defence Minister got down to the serious business of defence reforms and increased capital funding.

SHRINKING budget: DRDO”s Advance Towed Artillery Gun System (ATAGS) being displayed on Rajpath during the 68th Republic Day Parade in New Delhi. PTI

PRIME Minister Narendra Modi spoke passionately about the surgical strikes in the Lok Sabha recently, saying the country could never repay its soldiers for it. During the 2017-18 budget presentation, the defence budget took care of the salary bills of the soldiers but neglected to equip them with the latest wherewithal to carry out deeper surgical strikes.A country’s defence budget represents its man-machine mix and the statement of intent to combat the internal and external challenges facing it. India’s latest defence allocation of Rs 3.9 lakh crore (including defence pensions) has been described as “flat”. In terms of capacity accretion, the capital funding is concave. In real terms, according to Shane Mason of the US Stimson Centre, the capital account of Rs 86,488 crore represents a 5 per cent decrease from last year’s, of Rs 86,189 crore. This is about $10.5 bn of a total budget of $51 bn. Mason adds that key budget accounts within procurement are also cut, like shipbuilding shrunk by 30 per cent and aircraft modernisation cut by 6 per cent. This will hit capability accretion badly in uncertain times and growing security challenges. What is worse is that last year’s capital budget went underutilised by nearly Rs 7000 crore, hitting modernisation adversely. So with the new capital budget flat and negative, capability enhancement would be standstill. While the allocation would service carryover liabilities such as Rafael fighters and M 777 howitzers, the infantryman who bears the brunt of day-to-day counter-insurgency operations will remain without a frontline rifle and personal gear. Why does modernisation have to take repeated hits due to under-allocation and under-utilisation of funds? The defence budget is overwhelmed by legitimate and soaring salary bills and rising pensions due to                                                                                                                                                                                                             The cumulative effect of OROP (only 90 per cent realised) and the Seventh Pay Commission (only partly implemented). Of the Rs 3.59 lakh crore budget, only Rs 86,000 crore account for weapons acquisition. The rising manpower costs have severely undermined the machine upgrade. Manpower expenses will continue to increase and unless more funds are made available for modernisation the stagnation in capability build-up will stay. Fulfilling the commitments made to ex-servicemen on OROP  by the government was a political imperative. Meeting challenges of defence and security are in national interest but lower priority. Winning elections is the highest political objective of the ruling party. Resolving the competing demands of manpower costs and modernisation is also a key objective of the government.Finance Minister Arun Jaitley, who earlier doubled as Defence Minister, explained the interlinked dilemmas of shrinking funds for capital spending and the apparent inability of the defence forces to spend the monies allotted for modernisation on time. Answering former Editor of Business Standard, AK Bhattacharya’s question on Doordarshan that there is criticism that you have not done enough for defence, Mr Jaitley replied “If the Defence Ministry can speed up its acquisition mechanism they can get as much money as they want. Budgetary allocations are only indicators. Defence gets the highest priority. The amount indicated in the budget plus the pension is a large amount”. Clearly two things are evident from these comments. Increase or decrease in defence budget except salaries is directly related to provisions on modernisation  in capital and revenue heads of acquisition, upgrade and maintenance of defence inventories. Experience over the last two decades has shown that capital allocation especially in case of the army, has not been able to be spent on time due to hassles in procurement procedures.There is another plausible reason for non-utilisation which is that North Block officials towards November/December of the year place an informal embargo on any new contracts ensuring that earmarked funds lapse on 31 March. The government must enable Defence forces to utilise in full the capital account for modernisation Is defence really a high priority for the government as stated by Mr Jaitley ? The answer is a resounding ‘no’. The bureaucrats and political class have convinced themselves there will be no war. Gen Bipin Rawat, within hours of taking over as Army Chief told the media that the army was prepared for a two-front war and the Cold Start doctrine (never formally acknowledged by the government) would be its fulcrum against Pakistan. Given the current operational preparedness levels of the armed forces (recall Gen VK Singh’s hollowness in critical capabilities cry in 2012) it is not only not possible to deter cross-border terrorism emanating from Pakistan but also catching up with China’s overwhelming conventional nuclear and terrain superiority is a far cry.At Kozhikode, during the BJP conclave last year soon after the terrorist strike in Uri, Jaitley pledged to increase the defence budget which he has not done. Modi does not miss any political opportunity of praising the Army’s surgical strikes and commending Defence Minister Parrikar for them. Parrikar attributes the Army’s success to his RSS training. Both bask in reflected glory. On Budget day in the numerous TV debates, not one word was uttered on the inadequacies in defence allocation despite the GDP growth rate being 7 per cent. Politicians who sang surgical strikes in chorus were mum.Three trends can be noticed in the defence budget. First that defence expenditure in the last decade as percentage of GDP has been declining steadily from 2.19 per cent to 1.71 per cent to 1.65 per cent today which is lowest since 1962. Further, in the last two years, the revised estimate (RE) has been less than the budget estimate when the government has claimed higher RE in all other sectors. Second, defence budgets are flattening with capital accounts stagnating for the last 8 years resulting in accumulated obsolescence. What good are 85 projects worth Rs 1.50 lakh crore cleared by Defence Acquisition Council when the Defence Procurement Procedures, despite one dozen upgrades, does not foot the bill? Third, manpower costs continue to undermine modernisation. While the manpower heavy army is able to spend just 18 per cent of its budget on modernisation, the equipment intensive Navy and Air Force do better with 52 per cent and 59 per cent utilised for modernisation.The Lt Gen Shekatkar report on streamlining manpower is really a band- aid solution. India needs a comprehensive defence and security review. The latest suggestion is to establish a Defence Capital Acquisition Authority to fast-track defence contracts sans kickbacks. In 1988,  a suggestion was made for the formation of a Defence Acquisition Command and a Plans Programmes Budgeting System for evaluating equivalent capabilities of different weapons platforms to rationalize the defence budget.Evaluating the latest defence budget, the Stimson Centre says that from “a strategic perspective, India’s mismanagement of the defence budget will prevent the military from releasing its full potential…”. In December 2015 at the Combined Commanders Conference Modi had declared that reforms in senior defence management was an area of priority for him. Only Mr Modi can walk the talk. But is he interested in defence?The writer is a founder-member of the Defence Planning Staff, the forerunner of the Integrated Defence Staff.