Decoding The Defence Budget 2024-2025

It is heartening to read in the media that we will be a USD 5 trillion economy tomorrow, and soon grow to USD 30 trillion. So, it hardly matters that India accounts for only 1.5% of global goods exports and 4% of global service exports; our external debt rose to USD 635.3 billion by end September 2023, our per capita (person) GDP is 139th globally; we rank 111 of 125 countries in the Global Hunger Index and unemployment rate is forecast at 7.38% in 2024.

Why did the Finance Minister present only an “interim budget” when the government is confident of a third term with an overwhelming majority? It was amusing to see the Finance Minister ducking Bollywood-style the question: what is good about the Budget?

There are many posts on social media related to the Budget, with quips such as: “poor got subsidy, rich got rebate, middle class watch TV and debate; budget is interim because expenditure in elections maybe very heavy – prices of lawmakers have also gone up; what money (GST included) to be withheld from which States and subsidies from who can only be decided after elections, depending on the win and losses”.

But this article is about the defence allocations, which the ‘paid media' is hailing as a “whopping 13% of the total interim Budget. In effect, the hike in defence allocation from the previous year is modest. Now, Rs 6.21 lakh crore has been allocated for 2024-25, the previous year’s allocation was Rs 5.94 lakh crore.

How much of this increase of Rs 0.27 lakh crore will get negated in actual terms on account of inflation? Will it end up “negative” in actual terms as has been happening in recent years?

Similarly, Rs 1.72 lakh crore is set aside for capital acquisitions, it was Rs 1.62 lakh crore in the previous year, for purchasing new weapons, aircraft, warships and other military hardware. But we may not be able to get the planned numbers because of inflation, cost escalations and where price negotiations are yet to be done.

The capital outlay of Rs 1.72 lakh crore includes: Rs 40,777 crore for aircraft and aero engines; Rs 62,343 crore for ‘other equipment’; Rs 23,800 crore for the naval fleet; Rs 6,830 crore for naval dockyard projects.

The revenue expenditure is pegged at Rs 4,39,300 crore; including Rs 1,41,205 crore for defence pensions (Rs 2,82,772 crore for military and Rs 15,322 crore for civilian employees of Ministry of Defence (MoD).

Revenue expenditure for the Army has been pegged at Rs 1,92,680 crore, while the Navy and the Indian Air Force have been allocated Rs 32,778 crore and Rs 46,223 crore respectively.

The Finance Minister introduced a new plan to enhance deep technology in the defence sector, which is good, but the fact remains that in the overall context the modest hike in Defence Budget 2024-2025 is just about 2% of our GDP and leaves very little for modernization of the Armed Forces.

Compare this with a small country like Japan, which has no land border with China, hiking its defence budget for FY 2023 by 26% over the previous year and by 16.5% in FY 2024 over 2023. Even our Parliament Standing Committee for Defence has gone on record to say that the defence budget should be minimum 3% of GDP. We need to emulate how Charles de Gaulle made France a strong military power.

Our policy makers perhaps feel that giving an annual US$100 billion benefit to China would buy peace, not realising how this helps the PLA modernization more. We need to acknowledge the following:

• The China-Pakistan threat is growing at asymmetric and conventional levels and China is tightening the ring around us.
• China is building a second highway (G-695) through Aksai Chin (that would run close to Galwan and Pangong Tso) and another expressway to Nepal for offensive purposes.
• Catching up technologically with China is a few decades away. This includes matching PLA capabilities in hypersonic, UAVs, electromagnetic and space/near-space based weapons.
• In combating the PLA in high altitude, the soldier on ground will continue to be the deciding factor. AI is a force multiplier which cannot replace the soldier.
• The Agnipath scheme has negated our manpower advantage over the PLA and dented the strong ties between the armies of India and Nepal.
• Media blitz over expenditure on military pensions was without comparing the much higher expenditure on civilian-defence employees and other government services. Besides, every civilian-defence employee is four times more expensive than his uniformed counterpart or retiree.
• According to a Pentagon report, about 1,300 of the 1,900 fighter jets of the PLA were 4th generation or more by the end of 2022 plus J-20 and FC-31/J-21 are considered 5th generation. Compare this with equipping IAF with Tejas Mk-I instead of at least Tejas Mk-II.
• Chief of Air Staff, Air Chief Marshal VR Chaudhari has said it would take another 10 years before the IAF reaches the required 35 squadrons strength. In fact, the operational requirement of 42 squadrons was brought down to 35 a few years back when it was found that bringing it to 35-strength is also a few decades away.
• Military acquisition shouldn’t be ad-hoc and politically motivated. India inked a deal for importing 36 Rafale fighter jets 2016 against need for 126 multi-role fighter aircraft established way back in 2007.
• The Indian Navy has much catching up to do with the PLA Navy capabilities, particularly at the sub-surface level. The void in Mine Counter-Measure Vessels (MCMVs) is an invitation to cause avoidable damage to our naval assets. Also, terming the ongoing anti-piracy operations by the Indian Navy a “strong signal” to China of our naval might is outright stupid.

Finally, India cannot become a global power without being militarily strong. We need to find the right mix between economy and security because one war can take us back many years.

Lt General PRAKASH KATOCH is a veteran of the Indian Army. Views expressed are the writer’s own.