Event ReportsPublished on Jun 26, 2018
Modernising for the future: Budgeting, capability and production challenges

Referring  to the statement of Vice Chief of Army Staff to the Parliamentary Standing Committee, with regard to the allocation of insufficient funds to the Army, and defence as a whole, Manoj Joshi, Distinguished Fellow, ORF, set the tone for the discussion towards the ‘organisational and restructuring reforms’ needed. Admiral Arun Prakash cited the fact that out of the more than 22 lakh crore of government expenditure, more than 50% goes to debt servicing and social welfare schemes and about 17% to the defence expenditure,and  that considering the state of our nation and its people, defence enthusiasts should not ask for more.

He attributed this to the absence of a “strategic culture”  amongst the forces as well as the policymakers, even after facing repeated surprise attacks. There was a certain absence of  dedication and seriousness in  the bureaucrats and the Ministry of Defence that had led to the lack of   reforms even after 70 years of independence. The absence of a proper cyber and IT infrastructure was  a loophole in Indian Defence as, according to the panel, most of the modern wars are not going to be fought in  on the traditional battlefields but the Cyber and IT world and thus developing it is a must for India.

The major, and concurrent, cause of the most of the Defence ‘Budgeting and Preparedness” problems, was  the lack of well-defined ‘National Security Strategy’ and/or ‘National Defence Strategy’. Apart from this, lack of coordination, in both, budgeting and preparedness, and synergy amongst the three forces was seen as an impediment towards the shortcomings faced by the Ministry of Defence. There seemed to be a clear consensus amongst all the panellists towards the need to devise a well-defined ‘National Security Strategy’ as the first reform step needed towards preparing the forces and the bureaucracy towards any adverse situations. The second reform that the panel sought was setting up of a Chief of Defence Staff or a Permanent Chairman Chiefs of Staff Committee to provide for a centralised command centre, for all the three forces.

The panels also focussed on the “Rightsizing” the forces and the idea of “Asymmetric Advantages”. Discussing  the need to maintain a 1.2 million strong standing Army, the panel questioned   the large manpower with the Ministry of Defence(MoD) and attached bodies. Considering the large sums of money that goes towards the manpower, and especially the rising pension budget, the panel sought to optimise the manpower involved with the Defence as whole, rather than the forces itself.

 Abhijnan Rej, Fellow, ORF, called for effeceive prioritisation of requirements, and effective analysis looking at having asymmetric advantages  to make the right choices. Speaking about the ‘mismatch’ in the projected requirements by the MoD and the allocations made by the Finance Ministry, Amit Cowshish, former Financial Advisor (Acquisition), Ministry of Defence, pointed towards the ‘Financial Unviability of Defence Budget’ due to the inaccurate projections made by the forces and MoD based on the unrealistic assumptions. To bring down this mismatch, which currently stands around 1.32 lakh crores or 34% of the projection, he emphasised that the projections be made on more ‘realistic’ and need-based figures rather than inaccurate assumptions and ambitious projections.

AM (Retd.) M. Matheswaran pointed to  how the defence industry of France evolved in the the 1950s with the help of the US,  to a state-of-art one in 1990s. IN his presentation “Defence capability challenges depend on the Defence Production and Innovation” he pointed to the lack of significant long-term policy and consistency in defence production. Failure in reverse engineering and efficient and effective use of acquired technologies is the reason why the forces are still  dependent on foreign acquisitions, even after 70 years of independence.

Emphasising on the need for restructuring of various bodies and entities related to defence, the panel concurred that it can reap significant advantages, both, in terms of financial viability as well as operability. Another possible reform that emerged from the discussion was providing level playing field for the private players in defence production. Most of the defence industries in the world have been led by government in some stage or the other to make them self-sustaining and vibrant. So the government has a very significant role to play to develop the Indian defence industry, not just by framing policies, but also by providing push to the indigenous production.

The talk thus concluded with various concurring recommendations, from restructuring to rightsizing, with Manoj Joshi, in the context of the DRDO, quoting an Israeli scientist that sometimes there is a need to just dismantle an organisation and then reconstituting  it afresh.

This report is prepared by Rishabh Tiwari, Research Intern, Observer Research Foundation

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