The Narendra Modi government’s first budget of the second term has generated predictable reactions, but one of the most predictable ones pertains to its treatment of the defence sector. Finance minister Nirmala Sitharaman has allocated ₹4.31 trillion for military spending (including military pensions of ₹1.12 trillion), keeping it unchanged from the 1 February interim budget. Compared to around 17% in 2014-15, this year’s defence budget will comprise 15.5% of government expenditure and only 2.04% of gross domestic product (GDP), as compared to 2.28% of GDP in 2014-15. What was significant was the decision of the finance minister to exempt the import of defence equipment from basic customs duty in light of the nation’s defence modernization requirements.

Given the above numbers, as was expected, there has been criticism of the government for failing to adequately provide for the needs of the armed forces. India’s challenging security environment means Indian armed forces need to upgrade themselves rapidly and prepare for modern-day threats. But successive Indian governments have now been signalling that resources for defence will be at a premium. India’s other socio-economic needs will be prioritized and Indian armed forces will have to become smarter in how they manage their dwindling resources. It is one of the main reasons why every year there is an expectation that capital allocation would see a significant hike, only to face disappointment.

India’s defence policy faces numerous challenges and lack of resources is not on top. Defence reforms are needed urgently and no one seems particularly bothered about the lack of movement on that front. All we complain about is defence allocation in annual budgets. India’s defence dilemma has been amply underscored by the fact that even Modi, who was elected in 2014 with a thumping mandate, found it so difficult to move ahead with the procurement of 30 odd fighter jets in his first term. This, despite the fact that the Indian Air Force has a dwindling number of fighter squadrons to confront the growing air threats posed by China and Pakistan. The post-Pulwama situation made it clear that for all the out-of-the-box thinking and effective execution, Indian armed forces lacked the killer punch, given their lack of upgradation.

India’s defence budget in recent years has been falling, but more significantly, an increasing component of the funds are being allocated towards salaries, pensions and other operating expenses. And given the demographic trends, the nation’s pension bill is becoming larger, even surpassing the salary bill. It is therefore not surprising that India’s top political leadership has been calling for reforms. Rationalizing manpower in the armed forces should be a priority, and some steps have been taken for that. Recently, the Indian Army initiated a restructuring exercise with the aim of cutting back up to 100,000 soldiers and reducing its revenue budget, which is expected to rise to over 90% of the total in the coming years. The central reform entails replacing division-sized forces with bulked-up brigades called Integrated Battle Groups or IBGs. This is an acknowledgment that the armed forces will have to be a leaner, meaner fighting force within budgetary constraints. There is no time to lose.

Under Xi Jinping, China’s People’s Liberation Army (PLA) has already initiated its most wide-ranging and ambitious restructuring since 1949, which includes reducing the size of the PLA by 300,000 soldiers, increasing the size of its navy and air force, creating new Central Military Commission (CMC) departments and ground forces headquarters, restructuring seven military regions into five theatre commands. This exercise is intended to enhance the PLA’s ability to conduct joint operations on land, at sea, in the air, and in the space and cyber domains.

Indian defence policy remains constrained by its inability to fundamentally restructure its armed forces to meet the requirements of modern warfare. This is compounded by the fact that the other major constraint on resource optimization remains the glacial pace of decision-making. India’s defence bureaucracy has raised lack of decision-making to a veritable art form. With its labyrinthine and opaque procurement processes, India is now trying to chase competing goals of trying to achieve self-reliance as well as achieving effective immediate deterrence vis-à-vis its adversaries. The danger remains that with Indian decision-making being what it is, India will be able to achieve neither of these two objectives.

We often like to think of China as the driver of our military modernization programme, but even Pakistan’s armed forces are technologically superior to India’s. It is acknowledged, but we tend to rely upon the mettle of our brave men and women in the services. And by doing so, we not only delude ourselves, but also do a great disservice to our armed forces.

Major powers across the world are undertaking significant reforms to make their armed forces fighting fit for wars of the 21st century. India cannot afford to lag behind. So, instead of complaining about declining defence budget, which is unlikely to change anything, the need of the hour is to double down on defence reforms with strategic foresight.

Strategic planning is needed with a sense of urgency; whining about the defence allocation is a road to nowhere.

Harsh V Pant is professor of International Relations, King’s College London

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