Indian Army’s quest to establish credible Mountain Strike Corps to be deployed along the China border is unlikely to be realistic, as the service is demanding Rs 66,695 lakh crore ($10 billion) over the next five years to induct new military gears and raise additional 80,000 troops.
Given the current state of India’s economy, facing high current account deficit and fiscal deficit, it is unlikely that additional funds will be provided in the next two years to raise the new corps. The only way this can be done is by diverting available funds from the Capital Head of the general budget, which is meant to buy weapons and equipment to the new Mountain Corps.
The total funds available for the Indian Army in the current year are being consumed for paying past commitments and there is very little left for buying fresh weaponry and equipment. The fiscal situation has worsened with the rising of the Indian Rupee against the US dollar, which has depreciated by around ten per cent in the last one year. As India buys weaponry and equipment in US dollars, there is a cut of over 20 per cent in the budget allocations for the Indian Army because of currency fluctuations.
Currently, barely five to seven per cent of the total funds available with the Indian Army in the current financial year are free for buying fresh weaponry and equipment, as the remaining 95 per cent is committed for past defence contracts.
The drain on the defence budget is largely on account of the Revenue side of the budget, which means paying for salaries and pensions for the 15 lakh troops.
India spends nearly 42 per cent of the total defence allocation on buying fresh weapons and equipment, and the remaining 58 per cent will be spent largely on paying salaries and pensions.
The procurement allocation for fresh purchases will also see a hike of 9.3 per cent from $11.47 billion last year to $12.64 billion in the upcoming 2017-18 financial year. However, $1 billion was left unspent from the Capital Expenditure head due to delays in procurement of ongoing projects in the Ministry of Defence.
In the procurement allocation, meant to buy fresh weaponry and equipment, Indian Army gets $3.7 billion, which is lower than Indian Air Force which has been allocated $4.9 billion. The bulk of the funds are being made in the Revenue Head of the budget, which is mainly meant to pay salaries. Indian Army will spend nearly 82 per cent for salaries.
Some of the defence projects of the Army which need execution including replacing air defence systems, buying short range surface to air missiles, very short range air defence systems , tracked artillery guns, light strike vehicles, light utility helicopters, unmanned aerial vehicles, assault rifles and carbines.
The Drain On The Defence Budget Is On Account Of The Revenue Side Of It, Which Means Paying For Salaries And Pensions For The Troops
The Army has drawn plans to replace or upgrade the existing Russian air defence systems at a cost of over $6 billion and another $6 billion is to be spent for the purchase of a variety of 155mm artillery guns for over eight years. In addition to the purchase of air defence systems, and 155mm artillery guns, the Army plans to purchase over 1,000 Futuristic Infantry Combat Vehicles, Defence Communication Network, Battlefield Management Systems for network centric warfare, Attack Unmanned Aerial Vehicles, Light and Medium Utility Helicopters, Anti-Tank Guided Missiles, New Generation Carbines, and other small arms.
The biggest challenges for the Indian Army are to prepare for a Two Front War, which is already a major pressure on the limited resources, as the Army will have to prepare to fight both China and Pakistan simultaneously.
In addition, the army needs to upgrade its intelligence, surveillance and reconnaissance capabilities on the border with China.
The non-availability of extra money for the new 17 Mountain Corps could mean putting on hold other defence projects of the Indian Army or letting the Corps come up with little weapon and equipment.
Limited resources and no hope of getting additional funds would mean either a toothless new Mountain Corps or putting on hold some of the defence projects already planned. To equip the Mountain Corps , the Indian Army would need to buy light tanks, additional transport aircraft, advanced light arms, artillery guns, radars, and a dedicated network centric warfare system for the mountain corps.
In addition, the wish list of the Mountain Corps include procurement of:
– Around 700 Light Armoured Multi Purpose Vehicles at a cost of $166.6 million
– Around 1000 Light Strike vehicles at a cost of $4 million.
– Around 50 Command Post Vehicles for Recce and Special operation for $8 million.
– Around 1300 Caravan cum Office Container vehicles at a cost of $39.16 million.
– Around 145 155mm/39 calibre Ultra Light Howitzer guns at a cost of $500 million
– Two Regiments of Heron Unmanned Aerial Vehicles at a cost of $200 million.
– Around 170 Inertial Navigation Systems at a cost of $394 million.
– Around 500 Electronic Theodolite systems at a cost of $42.5 million.
– Weaponisation of 1000 Searcher and Heron UAVs at a cost of $416.6 million. – Around 4 Large size Aerostat Radar systems at a cost of $500 million. Ends.
Now coming to this year, the Defence budget allocation of Rs. 2, 74,114 crore (excluding the outlay of Rs. 85, 740 crore for the defence pensions) is prima facie inadequate for the modernisation of the armed forces. The medium term fiscal policy of the finance minister regarding the total defence expenditure is estimated at about 1.6 per cent of the GDP in 2017-18 and 2018-19. The reality is different. If counted on the basis of real inflation rate, the enhancement of defence budget is not a matter of pride. It is in fact a nightmare, considering the threat perception from Pakistan and China.
There are several ways the budget would adversely affect modernization of the armed forces. The past experience of non utilisation of funds due to complex purchasing policy and the tussle between MOD and Finance Ministry are some of the reasons for this logjam. Mostly because of these two reasons, most of the vital purchases for the all three wings are adversely affected. It has been further witnessed that the capital budget has weaken the case of higher allocation for the new acquisitions. It is not uncommon to hear that under utilisation of the capital budget is because of the mechanism, which would not let big contracts be approved. Consequently, the funds remain unutilised. What is needed is an outcome oriented monitoring of utilization of outlays as recommended by the Standing Committee of Defence Ministry. This is the only way to ensure that the focus shifts from ensuring full utilization of the funds to spending these wisely on the desired outcomes. However, the sad reality is; there is no indication that this is going to happen in the coming years.
