Emerging strategic challenges

Emerging strategic challenges
Pitching defence expenditure against development
Harwant Singh

IT is only a few days for the national Budget to be tabled in Parliament and the nation’s hopes and fears are palpably discernible. Hopes that the Budget will be a harbinger of all- round prosperity, deliver the final blow to the inspector raj and control regime, and usher in an era of unfettered private enterprise with all its dynamism. There are fears of added tax burden and the prospects of a “dream budget” once more turning into a nightmare. Those concerned with national security are pinning their hopes on the promises of the Finance Minister and assertions of the Defence Minister, for greater financial support for the defence forces. Defence services need less of lip service and more of financial support to enhance their capability to meet the challenges from the emerging geo-strategic scene.

At times as these, when the economy is in recession and the fiscal deficit is becoming unmanageable, to seek a higher allocation for defence may appear a bit out of place and even unreasonable, if not unpatriotic. But it is also the moment when low levels of financial allocations for the last over 10 years have glaringly thrown up the deficiencies in the Indian military capabilities. Sustained low levels of financial allocations for defence (at an average of 2.3 per cent of the GDP) have resulted in deficiencies of equipment, essential stores and ammunition. Permanent assets such as roads, buildings and other infrastructure in the cantonments have deteriorated to a point of complete decay. Replacement of obsolete equipment has not been possible. No modernisation or upgradation of the existing equipment could be undertaken. All this has seriously impinged on the operational capabilities of the defence forces.

Pakistan’s misadventure at Kargil and sustained proxy war must be seen as a result of a perception of debilitation of operational capabilities of the Indian defence forces and consequent loss of its deterrence and coercive potential. Deterrence, coercive and dissuasive policies flow more glaringly from military capabilities, for the resolution of situations which otherwise may result in conflicts between countries. The cost of creating military capabilities which, when deployed, manifest in the form of deterrence enabling the achievement of aims without having to resort to actual fighting, eventually balance out with the expenditure that would result from a war. 

Taking the debate to an area related to defence allocations, it needs to be stated that defence and development are not mutually exclusive. But somehow in India development has always been pitched against military expenditure. In spite of many studies and much literature, we still do not know if there is any correlation between economic growth and military spending, much less the existence of even a casual relationship. However, it stands more or less well established that among Third World countries, those who are producers of military equipment experience positive impact from military expenditure on growth, investment, savings and productivity while non-producers experience a decline in growth and investment. India falls in the latter category. Then there are spin-offs from defence technology for civil applications and a boost to industrialisation. On this score too India missed out.

In India two developments have militated against the growth of indigenous defence industry. Firstly, the industrial policy framed in the early fifties debarred the entry of private enterprise in the field of defence industry (both production and R and D), making it the exclusive preserve of public sector units, (PSUs).) Related to this was the creation of Defence Research and Development Organisation (DRDO) which was tasked to develop military weapons and equipment (of all categories) and pass on the technology and know-how to the defence PSUs for bulk production. This scheme of things completely failed to deliver. Further, the PSUs being in a situation of a single supplier with a captive customer, they determine the pricing pattern with a very nominal check on the quality of their product. Thus the defence services have been ill-served; paying more for less and for low-grade equipment and stores.

While the DRDO absorbed nearly 5 per cent of the defence budget annually, it has failed in the development of indigenous weapons and equipment and consequently, India missed out on the arms industry, except for the transfer of technology (ToT) variety. Much of the DRDO funds get deployed in extensive and unnecessary civil works, furnishing and creating a five star culture, rather than in scientific work. We have been buying weapons and equipment for the last fifty years, along with the transfer of technology, but have completely failed to “take forward” the transferred technology. Over four decades of DRDO efforts have failed to develop any weapon system or equipment of consequence. The much touted Integrated Missile Development Programme is coming unstuck. After nearly 19 years of efforts the anti-tank missile (Cobra) and the air-defence missiles (Akash and Trishul) are nowhere near their full development. After two decades of efforts the multi-barrel rocket project (Pinaka) has fallen by the way side and we are now preparing to buy the Russian “Smirch” system. The list of projects of weapons development that had to be abandoned for want of progress is endless.

The DRDO or, in fact, the scientific community in India has followed a “dog in the manger” technology. We lost two opportunities of far-reaching consequences in the field of science and technology. One, on the defeat of Germany in World War II many German scientists were attracted to the USA while many more were taken prisoners by the USSR where they later worked for its defence R and D. Some of them were keen to shift to India. Not only that we made no effort to draw them to India but refused entry to those who expressed their desire to work in this country. The second occasion was when the USSR disintegrated. The old Soviet technological elite, impoverished by the collapse of communism, was only too willing to sell their services for a pittance. Iran took many missile scientists while China is believed to have taken 2000 of them from various disciplines of defence technology. Once again we missed out on this great opportunity due to the attitude of the government and the smuggness of the defence scientists in the country. The great Indian dichotomy has been that while we have no qualms in importing even low-level military technologies and equipment at a great cost, we have been loath at getting the finest scientific brains from Germany and later the USSR working for us in the country.

Consequently, we have been and will continue to be the largest importers of military equipment. The arrangements being worked out with Russia for joint development and production of military equipment will always leave us playing the second fiddle. India has been Russia’s principal buyer of military hardware and that country will be the last to kill the “goose which lays golden eggs”. I recall the disapproval the Russian delegation expressed on visiting the Arjun tank factory. The delegation felt that India was “wasting efforts” on producing its own tank when these could be easily obtained from Russia! So, whatever the arrangement for joint production, we will always be paying a heavy price for the technology component of the equipment which will have to come from Russia. The move to open the defence sector to private industry is half-baked or perhaps the intention is to kill it at birth. There are many restrictions and caveats. Therefore, we should not hope to get cutting- edge defence technologies coming through the private sector route. Thus the military expenditure in India will continue to bear a negative impact on growth, investment and savings.

Coming back to the issue of defence allocations, the point of economic affordability is very relevant, though it can be argued that for military expenditure to be justified, there is no necessity to demonstrate that it has a positive impact on the economy. Further, security is a prime “public good” and “is an essential first charge on the nation’s resources”. At the same time, such arguments fly in the face of ground realities. It is grinding poverty, low literacy levels, poor health care standards, absence of worthwhile infrastructure, etc, that need heavy investment and tend to relegate the priority for defence requirements. Unfortunately very little of the funds deployed for development reach the target end. The filtration system of the Indian state absorbs a greater percentage of the developmental funds on the way to the target.

The long-term fiscal policy (LTFP) of the Government of India had set a target for defence as a percentage of the GDP for 1985-1990 from 3.5 to 3.8 per cent. The Standing Committee for Defence (1996-97) had recommended a fixed percentage of say, 4 per cent. It is evident that subsequently these figures were considered unaffordable and scaled down to an average of 2.3 per cent of the GDP for the period 1988-2001. The national security tripod of economic strength, internal stability and military capability are interdependent economic strength remaining the pivot. The affordability and adequacy gap has been the “central dilemma” of defence planners in this country. It has frequently led to low funding, resulting in starving defence and debilitating its military capabilities.

Defence allocations cannot be viewed in isolation of general geo-strategic and geo-political environments and the emerging economic realities of the region. India’s military expenditure is one sixtieth of China (its GDP growth has been 8 to 10 per cent for over a decade and the defence spending has been 4 per cent of the GDP). India’s GNP is 5.5 times higher than that of Pakistan while military expenditure is 2.5 times more (1994 figures). Pakistan has access to cheap imports and transfer of technology from China and has set up its own arms industry. Therefore, India has to deploy larger resources to maintain the essential edge over Pakistan’s military capabilities.
Finally, as a rule of thumb for sustainable defence expenditure, (given a stable base of say 3 per cent of the GDP) the rate of growth of the GDP must not fall below that of the defence expenditure. Hopefully, as the Indian economy picks up enough momentum, it should be able “to haul along” the military sector more rapidly. As defence allocations improve, modernisation, force restructuring and manpower adjustment will follow.

The writer, a retired Lieut-General, was a Deputy Chief of the Army.   


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