20 January 2015

Army Modernisation Plan Adversely Hit as Budget Cut by Rs. 5,000 crore

18 Jan , 2015


Modernisation of the Indian Defence Forces is a continuous process based on threat perception, operational challenges, technological changes and available sources. The process is based on a 15 Year Long Term Integrated Perspective Plan (LTIPP), Five Year Services Capital Acquisition Plan (SCAP) and an Annual Acquisition Plan (AAP). Procurement of equipment and weapon systems is carried out as per the AAP in accordance with the Defence Procurement Procedure. The Defence Acquisition Council (DAC) has cleared a total of 41 proposals since June 2014, said Defence Minister Manohar Parrikar in a written statement in Rajya Sabha.

…the Army’s plan to modernise its arsenal with the latest weaponry has taken a beating as the Finance Ministry has recently cut the budget by almost about Rs 5,000 crore, leaving that much less money to make fresh purchases.

Unfortunately, the Army’s plan to modernise its arsenal with the latest weaponry has taken a beating as the Finance Ministry has recently cut the budget by almost about Rs 5,000 crore, leaving that much less money to make fresh purchases.

Army Chief Gen Dalbir Singh on 13 January said the Army identified seven critical projects, which would be pursued for equipping the soldiers with advanced firepower and mobility. These critical projects which the Army chief outlined are 814 artillery guns, 8000 third generation antitank missiles (from Israel), acquiring 197 helicopters for the Army, upgrading of tanks and BMP armoured vehicles, procurement of assault rifles, bullet proof jackets and helmets for the infantry soldiers and night vision devices for the infantry mechanised forces.

Out of these two projects, 814 artillery guns at a cost of Rs 15,750 crore and more than 8,000 third generation anti-tank missiles (from Israel) at a cost of Rs 3,700 crore were approved by the Defence Acquisition Council (DAC) headed by Defence Minister Manohar Parrikar, however, other five crucial projects are still under consideration of the Ministry of Defence (MoD). Both would have to be cleared by the Cabinet Committee on Security (CCS) before the procurement process starts because any project with more than Rs 1,000 crore budget needs CCS approval.

Since 2009-10, the Army’s capital budget is on a continuous decline hitting the lowest point in 2013-14 when the capital budget was only 18 per cent of the total allocation. This was spent mostly on the “committed liabilities” or existing purchases.

For 2014-15, the Army’s additional demand (for grants) was not met but capital budget, meant for acquisition was reduced by about Rs 5,000 crore as the money was transferred to revenue heads used for paying salary, pension and fuel bill, said a source. Other two services are also likely to have suffered from the budget cut and the modernization is likely to be delayed further, which will have adverse effect for the defence forces as well as for the national security.

Defence expenditure, which was 2.24% of GDP in 1997-98, has come down to 1.79 per cent of GDP in 2014-15 and this gradual decline is against the modernization of defence forces.

One of the reasons behind enhancement of revenue budget is the NDA government’s plan to implement one-rank-one-pension (OROP) plan for ex-servicemen which is pending for the last three decades. The government accepted the OROP in principle and modalities of implementation are being worked out. Last month, Parrikar said OROP, which was announced in the last budget, would be implemented before the next budget.

India cleared a bulk of defense projects worth $13 billion in a bid to boost the country’s national defence preparedness, the Indian DAC said on 25 October 2014. The council decided that six submarines will be made indigenously at a cost of about 50,000 crore rupees. It also decided to purchase 8,356 Israeli anti-tank guided missiles at a cost of 3,200 crore rupees for Indian Army. The council finalised purchase of 12 upgraded Dornier surveillance aircraft with improved sensors from Hindustan Aeronautics Limited at a cost of 1,850 crore rupees. The DAC also decided to buy 362 infantry mechanised vehicles at a cost of 662 crore rupees. The decision to manufacture the submarines in the country is in line with Prime Minister Narendra Modi’s Make in India pitch.

The Indian defence budget stood at US $11.8 billion in 2001. On February 17, 2014 Indian Finance Minister P. Chidambaram announced a 10% increase in India’s defence budget, taking it to $36.3 billion. In March 2014 China announced a 12.2 percent increase in its defense budget, raising military spending to $132 billion.

India announced plans to boost defence spending in 2014-15 by 12 percent over the previous year, and further opened the domestic weapons industry to foreign investment. The Modi government had long called for a militarily strong India to counter potential threats from both China and Pakistan. In July 2014 the new Indian military budget was set at 2.29 trillion Indian rupees ($38.35 billion) for 2014-15, and the foreign investment limit in the domestic defense industry was raised from 26 percent to 49 percent.

India cleared a bulk of defense projects worth $13 billion in a bid to boost the country’s national defence preparedness…

Arun Jaitley, who was both the Defence Minister and the Finance Minister in the new BJP government, presented the budget for the year 2014-15 on July 10, 2014. He stated, “There can be no compromise with the defence of our country. I therefore propose to allocate an amount of 2,29,000 crore for the current financial year for Defence. … Modernization of the armed forces is critical to enable them to play their role effectively in the Defence of India’s strategic interests. I, therefore, propose to increase the capital outlay for Defence by 5,000 crore over the amount provided for in the interim Budget. This includes a sum of 1,000 crore for accelerating the development of the Railway system in the border areas. Urgent steps would also be taken to streamline the procurement process to make it speedy and more efficient.”

Defence expenditure, which was 2.24% of GDP in 1997-98, has come down to 1.79 per cent of GDP in 2014-15 and this gradual decline is against the modernization of defence forces. Hopefully, the next budget will be around 3 per cent of the GDP keeping in view the long pending demand of defence modernization and threat perception from the adversaries China and Pakistan.

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