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Defence and Union Budget – IMPRI Impact and Policy Research Institute

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Defence and Union Budget - IMPRI Impact and Policy Research Institute

Harsh V Pant & Kartik Bommakanti

The budget made for capital expenditure must increase if India is to keep pace with China’s rising military might.

India’s tumultuous and volatile strategic environment showed no signs of abating in intensity. New Delhi continues to face a two-front challenge from both of its primary foes, the People’s Republic of China (PRC) and Pakistan, notwithstanding the latter’s recent conciliatory overtures, which are only a smokescreen to tide over its dire economic vulnerabilities.

On the other hand, the PRC presents an immediate challenge in the form of its occupation of Indian-claimed territory in Eastern Ladakh and a substantially more dynamic challenge with its military mobilisation and infrastructure upgrade along the entire stretch of the contested Sino-Indian boundary of almost 4,000 kilometers.

Compounding this challenge is the fact that New Delhi has to contend with the growing presence of the Chinese Navy in the Indian Ocean Region (IOR). China’s capabilities are expanding at a rapid pace with the country announcing the development of a third aircraft carrier. Other countries in the Indo-Pacific region are stepping up their efforts to counter the projection and application of Chinese military power.

The most prominent of these being Japan, which following the announcement of a new National Security Strategy (NSS) under the Fumio Kishida government has pledged and committed to raise its defence expenditure to meet the military challenge posed by the PRC. Japan has generally restricted its defence spending to a cap of 1 per cent of its gross domestic product (GDP), but with the release of the latest NSS, which dubbed the PRC as “the biggest strategic challenge”, the spending on defence is set to hit 2 per cent of GDP, paving the way for a significant military build-up.

Other states in the Indo-Pacific, such as South Korea, are on the cusp of raising defence expenditure, if not as drastically as Tokyo, but by as much as 5 per cent to deal with the menacing threat posed by North Korea, but equally to deal with the PRC’s aggressive actions, with public opinion in South Korea turning increasingly hostile to China.

The Indian government and the three armed services will need to work together more seamlessly to streamline defence spending as part of the forthcoming Budget.

The Philippines, for its part, is also expected to raise defence spending by as much as 8 per cent in 2023. This cumulative surge in spending is a direct outcome of the rise in Chinese military power, triggering a reciprocal military build-up by Japan and the other states across the Indo-Pacific. On the maritime front, the PRC’s naval forays into the IOR pose a threat to India, which is already locked in a military face-off along the Himalayan frontier, creating a military pincer movement against India.

Against this backdrop, the Indian government and the three armed services will need to work together more seamlessly to streamline defence spending as part of the forthcoming Budget. Given India’s national security challenges, the services will need to prioritise what they most require. Allocations made for capital expenditure must increase if India is to keep pace with the advanced military capabilities that the Chinese military already deploys or is in the process of doing so.

The personnel cost of the Ministry of Defence has been increasing over the years, inhibiting the much-needed modernisation process. The Indian Army’s inability to fully spend the allocated budget for modernisation also doesn’t inspire confidence in the future readiness to meet the challenges of the 21st century battlefield.

The government must equally address how it intends to get the services to achieve jointmanship, which is key not just for successful execution of military operations, but also for keeping costs low whether for logistics or air defence. The services will have to be compelled to work together, and budgetary allocations made must be geared to reflect outcomes that produce synergy between the three service branches of the Indian military. Further, the capital outlay under the defence Budget must balance “Make in India” with the operational readiness of the armed forces.

The services will have to be compelled to work together, and budgetary allocations made must be geared to reflect outcomes that produce synergy between the three service branches of the Indian military.

Make in India requires long lead times to generate tangible outcomes in indigenously developed defence systems. Whereas wars can occur at short notice without advance warning before initiatives such as Make in India can optimally and satisfactorily deliver to meet the operational requirements of the forces. Here the government must discern what capabilities are urgently required by the armed services to face the military contingencies against China and Pakistan.

Time is absolutely essential, which cannot be lost given the daunting and complex subset of real military challenges arrayed against India. Tackling the PRC’s military strength must be the primary focus of budgetary attention for the defence forces. For the public at large, the test for the government in the forthcoming Budget is to see whether an increase in the share of capital expenditure in the Budget sees the light of day.

This article was first published in Business Standard as Defense Budget and its Discontents on 23 January 2023.

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