Over the past few days, India’s defence budget has come under the spotlight all over again. Former Army chief Gen V.P. Malik (retd), in ThePrint’s Off The Cuff programme, said that India is not spending much on defence. With China’s defence budget nearly four times that of India, Malik argued that India’s defence budget should be at least 3 per cent of the GDP.
Although the capital budget for the armed forces saw a significant 19 per cent jump in the Budget 2021 presented last month, the increase in the overall allocation was only 1.5 per cent, with the total defence budget now amounting to 2.14 per cent of the GDP.
More startling, however, are the figures submitted by the Defence Ministry in Parliament, because they brought out a growing disparity between the amount allocated by the Centre and the amount sought by the armed forces for modernisation purposes. The Narendra Modi government’s capital budget allocation for 2021-22 is lower than what the armed forces had asked for seven years ago in 2014-15.
Widening budget deficit
One might feel for the armed forces but the fact is that the money pool is limited. India has to cater to multiple demands — social, economic, infrastructural, and agricultural among others. Moreover, every armed force in the world will want to have the best, even if it may not fit their bill.
The demand of the armed forces will always be high. But can the budget accommodate it?
Take for instance the existing defence budget deficit. The Navy had projected a requirement of Rs 70,920.78 crore under the capital budget. What it got was not even half — Rs 33,253.55 crore. Similarly, the Army had sought Rs 51,492 crore for its modernisation budget, but got only Rs 36,531 crore. And the Air Force’s Rs 77,140 crore projection fetched only Rs 53,214.77, majority of which will go towards payment for the recently ordered Tejas and Rafale aircraft.
This comes in the backdrop of India burdened by its worst tension with China along the Line of Actual Control (LAC) in decades.
What adds to the alarm is that, according to PRS India Legislative Research, the armed forces’ committed liabilities in 2016-17 was Rs 73,553 crore against which the budget allocation was just Rs 62,619 crore — a shortfall of 15 per cent. This drastic shortfall increased to 29 per cent in 2019-20 — when the allocation was Rs 80,959 crore against the committed liabilities of Rs 1,13, 667 crore.
Yes, under the Modi government, there has been an increased push for defence modernisation and contracts have been signed at a faster pace than the UPA era. But it is important to keep in mind that spending more is not the answer — spending right is.
And that’s why India can look at Armenia and Azerbaijan, which recently went to war against each other, to learn how to spend smartly.
Lessons on smart spending
As per the figures of Swedish think tank Stockholm International and Peace Research Institute (SIPRI), between 2009 and 2018, Azerbaijan spent about $24 billion on defence. On the other hand, Armenia spent a little more than $4 billion during the same period. However, in terms of the share of government spending, Armenia spends much more.
In 2018, in terms of government spending, Armenia spent 21 per cent towards the military even as one-fourth of its population lives in poverty. Azerbaijan, supported by its oil revenue, spent about 11 per cent.
Another smart thing that Azerbaijan did was diversify, not just in terms of equipment but also source. Armenia focused on buying the big toys from Russia, which also supplies to Azerbaijan. But then, Azerbaijan was intelligent enough to diversify its procurement and depended on Turkey and an odd vendor – Israel.
According to the Institute of War and Peace Reporting, “Israel was Azerbaijan’s first largest military trading partner in arms imports in 2015-2019. Its share of Azerbaijan’s arms imports during that period was 60 per cent, with Russia providing 31 per cent and Turkey 3.2 per cent. The remaining 5.8 per cent was divided between Ukraine, Belarus, Pakistan and China.”
This meant that Azerbaijan diversified and it was the use of weapons such as Turkey’s weaponised drone Bayraktar TB2 and the Israeli Heron-TP drone that really swung the war in its favour.
The IWPR added, “The Azerbaijani government prefers current political allies when choosing partners for military trade. Thus Russia was its main partner in 2010-2015, Israel in 2015-2019, and Turkey in 2020.”
What is notable is that at one point of time, Armenia held the military edge over Azerbaijan. Back in 2010, Armenia’s first deputy defence minister David Tonoyan had said the country was “seeking a more efficient military at a relatively low cost in response to Azerbaijan’s growing military spending”. This even as in 2008, it was very clear that Azerbaijan wanted to build “a strong army to regain the contentious Nagorno-Karabakh either by improving its negotiating leverage with Armenia or going back to war”.
The message on the wall is very clear. It is not about spending big, but spending smart within what your pocket allows.
Views are personal.