Finance Minister Arun Jaitley’s defense budget for the year 2018-2019 has been making headlines since the announcement on February 1. With last year’s defense allocation standing at 1.6% of total gross domestic product (GDP) compared to the global average of 2-2.5%, the Indian government has faced criticism for the underutilization of funds which impedes modernization. Amidst constant pleas to increase spending on India’s army to be on par with at least China and Pakistan, who spend 2.1% and 2.36% of their national income on defense respectively, this year’s budget addresses some of those issues while leaving others unfulfilled.
Talking numbers, India’s defense budget now stands at $46.16 billion which is an increase of 5.89% from last year’s allocation of around $43.59 billion. Of this, $30.6 billion is allocated for the pay and allowances for all the military personnel India employs, a figure which stands at more than 1.4 million. Additionally, nearly $17 billion has been set aside for pensions of retired army officials. Compared to the budget set aside for revenue, the government plans to allocate only half of that ($15.15 billion) to capital or the purchase of new weaponry.
While this seems rather counterintuitive to the government’s commitment towards modernizing India’s arsenal and improving its competitiveness globally, the real impediment to modernization may not be finances after all, but bureaucracy. Much of the army’s inability to remodel can be attributed to extremely long and archaic procurement procedures which can last from seven to ten years from the tender offer to the signed contract. Against this maze of bureaucratic confusion between the defense and finance ministries, what modernization needs may simply be less red tape, not necessarily more funds. Nevertheless, the Ministry of Defense’s former financial advisor Amit Cowshish has stated “Modernization will continue at the slow pace as in the past, resulting in new contracts worth about $10 billion being signed next year.”
In a response to India’s allocation of nearly 83% of its total defense budget on revenue, some have suggested reducing the size of its army may be a solution to its rising costs. Instead of funding the world’s third largest army, measures should be taken instead to remodel India’s army into a leaner military with better equipment. However, scaling down the armed forces may not be a viable option when the country faces two nuclear threats on its borders from China and Pakistan. Despite the demands for more funds allocated for armament procurement, military manpower is unlikely to be curtailed, according to a senior official at the ministry. India’s national objective, as early as 2014, was to build up deterrence to the point where a two-front war was unthinkable for both China and Pakistan. By refusing to scale down its military, it is evident that the government plans to see this goal through, while its less-than-expected allocation to capital implies that India does not plan on initiating an attack and will do little to exacerbate the border skirmishes more than grandstanding.
This year, Jaitley combined military objectives with a political rhetoric by commending the armed forces for their dedication and mentioned the primary aim of the budget – operational preparedness and modernization. Whereas the budget does achieve the intended glorification of the army, with salaries of active personnel being the primary focus and pensions of retired army officials rising an unprecedented 26%, critics are skeptical as to whether the other two objectives will be met. Whether the budget allocation calls for a more efficient means of procurement and smarter means of spending the money remains to be seen.