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September 1, 1999


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E-Mail this column to a friend Arvind Lavakare

Our Defence Expenditure: Some home truths

The peaceniks are perturbed -- "petrified" may be a better word judging by the shrill elitist reactions to the eve-of-Independence Day address by President Narayanan highlighting the need to provide the armed forces with the latest weapons and force multipliers.

Prime Minister Vajpayee's advocacy of nuclear weapons from the Red Fort the next day, the ruling coalition's election manifesto promising to correct an imbalance in the defence allocations and, finally, the release of the draft nuclear doctrine -- all these events have had a cascading impact on our peace corps members who always urge our nation to "make love, not war", and never mind that what this "love" in the last half century has done to soften our people and our international image.

"Mindless Militarisation" as a screaming headline of an edit page article in The Hindu was therefore no surprise. Our defence of the Siachen Glacier has been dubbed in that "esteemed" newspaper as "a pointless war", and we have been warned therein of the "enormous financial implications" of the nuclear doctrine.

Now a well-informed debate on the nation's defence expenditure is always needed and, indeed, welcome at this juncture. But "well-informed" is the key adjective. It is anything but that when The Hindu chronicler says "Excluding the provision for administration, army pensions, the BSF etc, we now spend Rs 45,000 crores (Rs 450 billion) every year on defence." That pronouncement is a blatant lie because, as per official documents, the Government of India's total estimated defence expenditure in 1998-99 excluding Rs 184.6 billion towards pay and pensions of all servicemen was Rs 303.6 billion including every other component -- from aero-engines and naval fleet down to secretariat, military farms and gallantry awards.

Clearly, some home truths need to be told to our peaceniks. Statistics on the trends in our defence expenditure over the last few years seems a good way to start.

Trends in Defence Expenditure @ 1989-90 to 1996-97

(Amounts in Rs rounded to nearest billion)
Expenditure incurred by Government of India 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97
On Defence only 144 154 163 176 218 232 269 285*
Total GOI expenditure 929 1,053 1,114 1,226 1,419 1,607 1,783 2,010
Defence as % of Total 15.5% 14.6% 14.6% 14.3% 15.4% 14.4% 15.1% 14.7%

@ Net of receipts and recoveries *Provisional. All other figures are actuals

Source: Expenditure Budget, 1998-99, Volume 1, page 86, of Government of India

Table 1 reveals that from April 1989 to end of March 1997, the actual total expenditure of the Government of India had hopped, stepped and jumped 2.16 times. During that same eight-year period, defence expenditure went up 2.04 times. In other words, defence was a wee behind Delhi's other expenditure despite the acknowledged spurt in Pakistan's proxy war in Jammu & Kashmir where the army's increased presence has been required since the last decade. Further, during the entire period under reference -- after which only official estimates take over -- defence expenditure averaged between 14.3 per cent and 15.5 per cent of the total Government of India expenditure.

Incidentally, it seems inappropriate to relate our defence expenditure to the country's Gross Domestic Product. Firstly, while defence expenditure is borne exclusively by the central government, the value of GDP is determined not only by the national budget allocations but also considerably by the various programmes funded separately by state governments.

Secondly, while expenditure on a budgeted item is more or less fixed with relatively little room for significant variation in its utilisation, GDP is a dynamic variable, dependent on several vagaries such as bad monsoon, floods and international economic or political fluctuations.

Moreover, GDP is estimated at factor cost at a certain price index and is based on myriad statistical inputs which are suspect in accuracy besides being subject to nebulous interpretations of the final product. Further, on a personal level, the expenditure of putting various safety locks on the doors of your apartment and on hiring a watchman to guard it should not be linked to your family's GDP.

Lastly, relating defence expenditure to GDP conceals the reality that that expenditure also contributes to GDP; for instance, as far back as 1989-90, a Reserve Bank of India publication that studied the sectoral composition of our GDP put the contribution of the Public Administration and defence sector at 5.6% -- higher than Mining and Quarrying (1.8%), Banking and Insurance (4.7%) and Transport, Storage and Communication (5.4%). Under the circumstances, it seems more meaningful to co-relate expenditure on one particular item with the total expenditure of the same entity in the same period.

What is the nature of our defence expenditure? The common perception is that it is just arms, armour, fighter jets and frigates. In reality, that is hardly so as revealed by the heads for which budgetary provisions were recorded in the last three financial years.

Budgetary Heads of Defence Expenditure*

(Figures in billion rupees)
Expenditure 1997-98@ 1998-99@ 1999-2000+
1. Ministry of Defence (Secretariat and Establishments) 3.2 3.5 3.5
2. Defence Pensions & Rewards (Army, Navy, Air Force) 49.5 72.7 73.5
3. Defence Services -- Army 183.6 220.8 239.2
4. Defence Services -- Navy 24.4 31.4 33.6
5. Defence Services -- Air Force 51.8 55.1 60.5
6. Defence Ordnance Factories 8.2 2.8 1.3
7. Capital Outlay on Defence Services 93.0 101.9 122.3
Total Defence Expenditure Provision 413.7** 488.2 533.9

*All provisions are net of receipts and recoveries

@Figures under the column are revised estimates that do not always conform exactly to those in the Budget presented originally

+Figures herein are those in the Budget presented in February 1999

** As against the original Budget figure of Rs 396.2 billion; the increase was primarily because of enhanced pensions and pay-cum-allowances consequents to the Fifth Central Pay Commission recommendations.

Source: Volume 2 of Expenditure Budgets 1998-99 and 1999-2000 of Government of India.

Table 2 brings out one striking fact: the country's budgeted investment on capital stock for defence has accounted for just between 21% and 23% of the total defect expenditure in the last three years. And the proportion on acquiring hard core war equipment is even lesser when it is considered that R&D and land chipped away an average of Rs 6.7 billion from the capital outlays in each of the three above years.

Which items then guzzle our defence budgets? Table 3 below provides the answer

Some guzzlers of defence expenditure
Item of Defence Expenditure Proportion of Total Defence Budget
  1997-98* 1998-99* 1999-2000@
1. Pensions, retirement benefits and rewards of all three armed services 11.96% 14.89% 13.76%
2. Pay and allowances of three armed services and auxiliary forces 23.90% 22.92% 21.59%
3. Pay and allowances of civilians in the three armed services 3.89% 3.88% 3.64%
4. Stores of the three armed services 23.73% 23.67% 24.18%

*Revised @Allocation

Source: Volume 2 of Expenditure Budget, 1998-99 and 1999-2000 of Government of India.

The conclusions from table 3 are obvious but need reiteration. Pay packets and pensions consume two-fifths of our defence budgets and almost another one-fourth goes into spares. How much then is left for actual weapons of modern warfare?

But our peaceniks utter war cries when there's talk of raising defence expenditure. It's either a deliberate cry of "Wolf! Wolf!" or plain ignorance born out of a lack of study.

For instance, there was a shrill protest against the so-called billions wasted on the Pokhran II tests in May 1998. Gone unnoticed and uncommented was the finding of London's International Institute For Strategic Studies that, based on the results achieved, those nuclear tests cost an estimated Rs 80 million!

And now there's the shrill protest over the weaponisation in the draft nuclear doctrine released recently by the National Security Advisory Board. Without quoting any source, authoritative or otherwise, one edit page writer of an "esteemed" newspaper has proclaimed that "full-blooded" nuclear armoury will cost between Rs 500 billion and Rs 600 billion over the next 10 years.

This flippant tossing of a time-frame figure on a very sensitive national issue is in contrast to a study which Bharat Karnad, an NSAB member, prepared soon after Pokhran II. Karnad concluded that having 350 to 400 nuclear/thermo nuclear weapons distributed over an air, sea and land system will, along with command and control systems, cost no more that Rs 700 billion over 30 years or Rs 23 billion a year -- a figure which is one-fifth of the pay and allowances proposed to be paid to the three armed services personnel in the financial year 1999-2000.

For heaven's sake, therefore, let no one play on populist emotions with hastily concocted defence financials-- remember, it's fission material and "mushroomy"!

Arvind Lavakare

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