Freeze the Defence Spending

T HE VAJPAYEE government has recently announced a slew of economic measures, including a mini-budget and several measures following that. A cut in defence spending is not one of them. In fact, all these measures are populist in nature intended for the voters in the early general elections. The fact that reduction in defence spending in consonance with the recent Indo-Pak peace process raise serious questions about the sincerity of the NDA government on peace itself. The rulers appear to be keen on a ‘peace harvest’ of votes in the coming elections as they did a ‘war harvest’ after Kargil.

The major Opposition parties have also not demanded a cut in defence spending. In fact, there is a perfect consensus between the BJP and the Congress, the two major ruling class parties, for further developing India’s military-industrial complex. Defence spending is treated as a holy cow. The other major parties, including the opportunist Left, simply fall in line. The defence budgets witnessed a steep hike after Kargil. In fact, they started increasing in te 1990s even before Kargil. The figures have been given below in Table 1 and Table 2. These figures do not include the total additional cost of mobilizing troops on a full scale at the borders. Now that the demobilization has taken place and there is a thaw in the relations with Pakistan, one would normally expect a reduction in the defence spending. But that doesn’t seem to be in order. Now that there won’t be a regular budget, with a vote-on-account, it is quite possible that the government will only seek an extension of the defence spending on the same lines as last year, on a pro-rata basis, for the first 3-6 months of 2004-05.

Even if there is no cut in defence spending there should at least be a freeze on defence allocations for three years, which will in effect reduce the spending in the third year in real terms. Even such an initiative is not forthcoming from the Vajpayee government.

Below, Table 1 gives the “real” cost based on SIPRI (Stockholm International Peace Research Institute) estimates, all made in US$ at constant prices. These show the increase from the late 1990s onwards. One point to bear in mind is that in recent years, allocations have been large, but spending on capital costs have usually been much lower than budgeted. This is because of procurement delays, etc. So at the end of the year actual spending looks to have risen less than originally budgeted. That is why in Table 2, in 2001-02 and 2002-03 there has been so little of an increase in spending. But when the payments for the procurement of hardware commence there would be steep increases.

Table 2 gives an “alternate” estimate of defence spending. These figures have been arrived at by adding the cost of defence pensions, cost of para-military forces (BSF, ITBP, Rashtriya Rifles etc.) and the cost of 25 per cent of annual spending on space and nuclear energy ministries. This “alternate” estimate might look largely arbitrary but it gives a better view of total funding on defence. Table 2 figures are in current prices. Here 2003-04 figures are based on budgeted amounts and 2002-03 figures are based on revised estimates. According to informed sources there has been a 8-9 per cent increase in defence spending in real terms from 1996-97 onwards.

One reason why the NDA is keen on high defence allocation is that they want to thoroughly milk the holy cow. There were allegations of procurement of defence hardware (even shoes and coffins) at highly inflated cost in the wake of Kargil conflict. When the media exposed it, the Defence Minister George Fernandes clung to his office like limpet and refused to resign.

One important reason for Pakistan’s persistent hostility towards India is the unaffordable arms race imposed upon it by heavy Indian defence build up involving huge defence expenditure. If the peace process with Pakistan has to move forward to substantial issues, then there should be a cut in defence spending. Otherwise ‘peace’ will only remain an electoral gimmick. So far all the peace initiatives and confidence-building measures (CBMs) have come from Pakistan. If the Indian government has to reciprocate in a genuine manner it should first announce a cut, or at least a freeze, in defence spending.
— BS