New strike corps for China border a fiscal minefield - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Monday 6 January 2014

New strike corps for China border a fiscal minefield

A road to nowhere. En route to the Sino-Indian border

By Ajai Shukla
Business Standard, 7th Jan 14

On the New Year, a flag-hoisting ceremony in Ranchi marked the raising of 17 Corps, India’s fourteenth army corps. This is the army’s first mountain strike corps (MSC), manned by more than 80,000 soldiers, who will launch offensives into enemy territory while the existing formations defend Indian soil.

Triumphal media commentary has lauded this as a caution to China after last year’s incident at Daulat Beg Oldi, when a Chinese patrol intruded into the northern tip of India in April/May and set up camp on the Indian-held Depsang Plain. India has already raised two new mountain divisions in the last five years, boosting the defence of Arunachal Pradesh by some 40,000 troops. Now another 80,000 hope to deter Chinese adventurism.

Yet, a Business Standard analysis of defence spending suggests that the MSC will financially damage India’s military more than it could military damage China’s, by dealing a crippling blow to military modernisation.

Fig 1: Revenue versus capital budget: 2013-14

Total allocation
Percentage of budget
Revenue allocation
Capital allocation
Capital to Revenue
Air Force
Ordnance Factories
(-) 508.66
(-) 0.25%
(-) 944.62
Quality Assurance

Already half the defence budget goes to the army, which spends just 18% of that allocation on new equipment (see Fig 1 above).  More than four rupees out of five go on revenue expenditure --- the cost of salaries, transportation, training, housing, etc --- just to keep the army running. Of that, two-thirds goes on pay and allowances for 12 lakh soldiers. Adding 80,000 more will bloat the payroll unsustainably, with a further blow coming when the 7th Pay Commission raises salaries. That will drive down capital expenditure.

While the army, more than the navy and air force, is a manpower intensive force, its challenges on the mountainous northern border relate more to equipment shortages --- like 155 millimetre ultra-light howitzers and towed guns, and air support --- than to any dearth of manpower. The large numbers already deployed are also rendered ineffective by a poor road network that ties them down to one spot. Analysts note that this lack of roads will also prevent the strike corps from moving quickly, depriving it of the crucial element of surprise.

“The mountain strike corps will be yet another immobile, inadequately equipped formation,” predicts a top army planner.

MoD planners have glossed over the issue of funding for the MSC. Its estimated price tag of Rs 64,000 crore over the next 5-8 years requires Rs 8,000 crore to be spent annually, for eight consecutive years, as units are raised and equipment procured. However, an examination of capital spending makes clear that major new expenditure cannot be absorbed. The reason --- almost the entire capital budget is pre-committed to instalments for procurements made in earlier years.

In major defence purchases, payment is normally spread over 5-10 years, as the vendor meets delivery-linked milestones. The army, navy and air force, like careless credit-card users, have run up so many bills that the capital allocation now largely pays for earlier buys, leaving almost nothing for new procurement.

Fig 2: Capital budget* increasingly pre-allocated

Defence spending
Revenue spending
Capital expenditure
New Purchase
Committed Liabilities
Total *





2012-13 (RE)


* The allocation to the army, navy and air force. This excludes allocations to the DRDO, cost of land & works, and supplies from the Ordnance Factories.

This slide has been visible for years, especially in the reports of the 15th Lok Sabha’s Standing Committee on Defence (see Fig 2 above). In 2007-08, 60 per cent of the capital budget of Rs 27,903 crore was disbursed on “committed liabilities”, i.e. tranches on procurements of previous years. Just 40 per cent, i.e. Rs 10,997 crore was available for new buys. By 2011-12, a mere 22 per cent of the Rs 42,462 capital allocation was available for new buys. This year, the money for new buys is just Rs 2,955 crore, a miniscule 4 per cent of the Rs 73,444 capital allocation to the three services. Next year will be even grimmer unless the defence budget rises sharply.

MoD sources tell Business Standard that Indian negotiators are stonewalling purchases like the Rafale fighter because there is no money for the 15 per cent advance. Nor can the “committed liabilities” be raised any further.

In the circumstances, raising a MSC would require a sizable hike in the defence budget, or a major diversion of funds from the navy and air force. Given the government’s fiscal situation, the former is unlikely; bureaucrats point out that defence spending has risen fourfold since the turn of the century --- from Rs 49,622 crore in 2000-01 to Rs 2,03,672 this year.

The navy and air force, which manage their revenue expenditure much more prudently than the army, have been equally profligate with capital expenditure. Their on-going liabilities prevent any significant diversion of funds to the army.

The MoD has not responded to questions about how the MSC will be financed. Military sources confirm that no internal tri-service audit was carried out of the alternatives to an MSC, such as increased land-based firepower, air power, road building or the nuclear deterrent.

Says Brigadier (Retired) Gurmeet Kanwal, who earlier headed the army’s official think tank, the Centre for Land Warfare Studies: “Since operational plans are being increasingly made jointly, a fully integrated tri-service budget is essential to synergise the utilisation of scarce financial resources.”


  1. Ghorcharrah Gabbar6 January 2014 at 19:58

    The figures speak for themselves. The Army will raise a skeletal command and control structure based on fiscal impoverishment, and flesh it out in an ad hoc manner based on strangely dual-tasked formations and logic-defying bizzare force-accretions.

    The Army is also raising a 'specialist' cadre of financial planners by appointing Higher Command jojos, as well as MBAs, to General Staff appointments specifically to forecast, monitor, track and optimise budgetary allocation expenditure. So much so for their repertoire of financial knowledge & skills ('the blind guiding the lame').

    There is also this other mention of CLAWS - the 'official' Army think-tank ! I couldn't stop myself from smirking at the manner in which the Army establishes these 'retirement homes' for its brass-hats. CLAWS is a defunct body of decadent pensioners who owe their daily cuppa to Vijay Oberoi, an infantry 'rishi-muni' and self-proclamed military intellectual genius who set-up the organisation.

    Almost 40% defensive localities in Arunachal Pradesh & Sikkim sectors are air-maintained throughout the year. We have pushed in a T-72 regiment into North Sikkim (and Leh) with little regard to the operating limitations of such equipment in those conditions vis.a.vis alternatives. Air transport assets and infrastructure for employment in support of ground operations in the ibid sectors remain frugal at best. The defence of the 'Siliguri Corridor' is a perpetual strategic wet dream for the Army.

    If anything, we could have taken a leaf from the Chinese book in developing strategic transportation and logistics infrastructure right upto the FDLs and potential offensive launch-pads. Raising and training crack mountain troops and incorporating specialist mobile weapon platforms including light tanks would have been a logical concurrent process.

    But... if wishes were horses...

  2. We are running into exactly same problem as the west by aping them blindly. moreover we seem to be buying more of support equipment rather than the ones needed to fight.
    We need artillery, antimaterial rifles, long range rockets and lots of ammunitions. All of them seem to be short supply.
    Our airforce has too many 2 engineed heavy fighters planned (raffle, Su-39), will be very expensive to run.
    we need lower cost single engined planes, should have bought grippen.
    of course we have far too many senior officers in all 3 arms.

  3. Quite surprised at the is devoid of THE main and THE core..
    Whilst debating/deciding and analyzing , be it economical or anything else...the comparing factor should have in it all the components, with a core component missing, the scales can weigh in the wrong direction.
    Thus whilst say painting a building, the worth of the building vis a vis the maintenance cost has to be measured. The area of a building must be taken into consideration, and the worth of the area. If the area is small and the cost high, it may mean the same as a large area but not important to spend.

    Where is the cost analysis of the area in the budget , analyses and judgement given.
    How much is Arunachal Pradesh worth, forget about National sanctity?
    Can the cost be recovered by proper planning say tourism, natural resources etc? One wonders why the adversary wants a big chunk of the place, will go to war for it, will nullify her neighbour's friendship but will maintain a cost to capture it?

    Here the author has taken the cost analyses but did fail to see what is at stake....and even if he is right,,,the point of the adversary wiling to shell out more ..not on maintenance but on capturing it first at a higher cost and then maintaining it shows the author hasnt taken the factor of curry whilst making one..

    A perfect BABU analysis and recipe

  4. Ajai, who has come up with the Rs 64,000 crore figure for the new strike corps? No Govt release as far as I know has stated that figure. This number looks absurdly large. Until we know how that Rs 64,000 crore number was arrived at, we can't assume all of that is going to come from Capital Expenditure.

  5. Wow !!! Shukla,

    Its one of your best article.

    Its frightening to see that the committed liabilities have increased exponentially during this St Antony administration..


  6. We need three types of forces
    1. For Border security
    2. For Internal security
    3. For External war and Expeditionary warfare

  7. Hi Ajai, I closely follow your articles in the Business Standard, and I feel few people open the doors to national security like you do. As for the Mountain Strike Corps, I felt elated and "secure" when I first heard the news, but later on the real impact of it sunk in. This post has been an eye opener. Military engagements around the world have shown us how technology and equipment are sometimes more important than how many splendid foot soldiers (ill-equipped or otherwise) you have. I am amazed why our establishment does not see it. Please keep up the good work and analysis you have been doing.

  8. I hope we don't go down the way of Greece! These idiots will bankrupt the Nation before they get kicked out in 2014. It is amazing how these people keep doing this looting again and again and again.....

  9. Like any Multinational Corporation, the Armed Forces and in particularly the Army must also go on a resource optimization + Cost cutting drive.

    If looked at properly the Army can reduce its bloat by way of a number of simple to elaborate measures.

    Some examples are below:

    1. Instead of Using Gypsies or Mahindras for staff use. Invest in TATA Nano or a Fuel Efficient vehicles, designed to replace usage of Mahindras and other Guzzlers in the Cities and non fighting formations. I understand that You can just buy stuff in the Army so it must be planned as a future expense. The long term and short term money saved is quantum. Officers and families can use many more cars as a Nano is only one lakh odd a piece. Its serviceable and spare parts available in any TATA service station in the country. As a matter of fact this can be done by Navy and Airforce too.

    Similarly Regimental Centres, Naval and Airforce Training centers, Centers of Services Such as MCEME, Ordnance , Army service corps may not be equipped with AWD stallions, a Low cost low power, fuel efficient truck will do.

    Higher mileage in the cities, where a powerful Mahindra or stallions humming around cities are not needed.

    2. Joint Basing - This may solve some of the small and medium Ranges shortage problems also. Many Air force bases may be expanded by attaching them with Army Aviation Bases. The existing Infrastructure can be developed on fixed wing bases and Aviation Corps units in peace location (family/MES infrastructure/Etc) Included. Mostly Southern command non operational units of the Navy Army and Airforce can integrate their non operational resources at single locations. Such as Command hospitals , why does each service need its own command hospitals ? One can understand smaller MHs but the big ones can be integrated. Not to mention it will be more convenient to patients.

  10. Contd...

    3. Standardization - This is difficult in the Army by virtue of its broad spectrum of operations. However, some areas like combat uniforms, smaller uniform articles like patches, peak caps , berets, nameplates, foot lockers, boots, bath towels, soaps for that matter even operational items like medicines, first aid kits and Body armor and if possible ammunition, Office computers used by clerical staff can be standardized and ordered in bulk. So as to either secure a wholesale rate. or let economies of scale take effect in PSU type factories.

    4. Automation and Out sourcing : Every one is aware of the situation where middle aged NCO cadre of our Army leave to a future of uncertainty. It is true that a lot of Military establishments in our country need a lot of maintenance , for which each service uses its own operational troops to maintain. If we can provide them employment to our ex service men by contracting them to provide many services which the army takes on with its own troop, we will be able to kill two birds with a single stone.

    Examples -

    a. Landscaping and Infrastructure maintenance for Messes, langars, Instuitutes, offices of non operational establishments. For the sake of ease Landscaping tools can be bought by the Army
    and tools may be used by contractors so they need not invest in capital.

    b. Ex EME troopers can be asked to form a maintenance company for the (Tata Nanos :) ) and even personnel vehicles of all personnel and family on that particular camp/cantonment may be offered subsidized repair services. Contracts to the best quality at the lowest bid can be granted by the Head of that formation on a contractual basis.

    c. ASC may be given a purely operational role and all non operational base logistics services be contracated to ex service men enterprises.

    d. Even in the case of laundry of military uniforms only. The Army can invest in Laundromats and other laundry (one time investment) which would be run by retired tradesmen. Additional subsidized laundry services may be provided on subsidized fees for military personnel families living on station.

    e. Base to town transport services - Armed forces buy standard vehicles services wide. And ex Servicemen private enterprises run the service.

    The Aim is
    1. the Army (or even navy and Air force) buys standardized equipment in bulk.
    2. The Ex servicemen placement cell works to form small ex servicemen enterprises per their expertise. Joining is easy as no heavy capital is required.
    3. Commanders hire enterprises on a contractual basis.

    All of the above will free the Armed forces of a lot of non essential staff, equipment and services privatization of the services of will ensure reduction in costs over time. As they are X servicemen they will already have a pension.

    Serving troops will focus on operational matters and hence a surge in morale is certain.

  11. @Rustom,

    Let me tell you frankly, you unashamed establishment apologist!

    By making a human wall on the India-China Border, you won't be able to save Arunachal.We tried that in 1962, didn't we? Forward policy and post construction!!!!Rings any bell ???

    In the age of precision strike,sensor fusion and standoff weapons, the strategy of massed infantry assault is nothing but a pipe-dream and HARAKIRI. What the Army need right now is a proper strategy of layer air-defense, integrated close air support platforms,airborne divisions, thousands of 155mm artillery with CALCMs and considerable amount of firepower - meaning better multi-caliber rifles, AM rifles, better SAW, Sniper Rifles, and an inventory of all-terrain vehicles. This things should have been bought yesterday..but your value seeking Army leadership doesn't have money to buy them.

    Why? Because too much use of credit cards!! Now they are fixed in the debt trap. Imagine, how will it turn out when the budgets go for significant cuts in next fiscal year..because...surprise, surprise, GoI has no money. The CAD has ballooned and government rating is on the edge of being declared junk.

    Now you see Mr Apologist, your wrong calculation of value is turning the wheel of military modernization backwards.

    The pity is that St Anty as RM has proved that honesty with lack of efficiency has no role in politics and administration.

  12. Col. Shukla is, of course right. The basic problem, IMHO, as the good colonel says, is the matter of resources. You cannot have any army as large as ours on 1.9%GDP. In the mid-1980s, spending was 3.3%. In the 1990s it was cut back because of fiscal crisis. But since then economy has been galloping along despite every effort by GOI to destroy it. Yet the budget cuts have not been restored. By contrast subsidies now take up 10-13% of our GDP (depending on which source we use). 30% of our true GDP is in black sector and not subject to taxation. Defense is barely 12% of the Government budget, and the govt is so inefficient that it barely collects 10% of GDP by way of taxes.

    So something has to give. Either the GOI increases defense spending by an absolutely minimum of$20-bil/year, I,e, 50% increase, or we cut the Army back to 20 divisions and equip it properly.

    BTW, my analysis is even a 50% increase in defense would simply be START toward properly equipping formations sanctions, not to mention formations that will be sanction.

    No need to shoot Col. Shukla, who is only the messenger here. There is nothing personal in what he said, he has simply given us just the facts, ma'am and sir.

  13. @ A.K

    Normally I would only debate with someone who has intellect in his/her points and doesnt try and show of using words that dont even have a relation to sentences made. However since you have missed the point entirely and barking up a wrong tree let me assure you that theres a big difference in planning something and implementing something..If there is a problem with the implementation or if it is corruptly implemented, it does not mean the plan and the idea is wrong..

    Now for your statement 1, it neither is english nor makes sense...but i guess ure trying to make a strong I'll let it rest
    ure statement 2 is completely false and devoid of 1962, the Indian was not only ill equipped but also the strength was under equipped and hitherto...The planning alsow as faulty and thus the IAF was not used and there was neglegence on the part of planers where as the man on the ground did a fabulous I guess if any bells should should be those that take away stars of hallucinations ringing on your side..

    ABout my point of calculations turnign backwards, I think you have not even understood what ive fact there is a lot of contradiction to what you write so i guess intelectual application wont be of much use to your point of view...

    In any case I had written on the formation of the corps as the news of it was announced , an article that was blogged elsewhere and on few forums....some took it well whilst others have suggested their point of view...but most have understood it and haven't commented on it by using words of the english language in a misplaced manner that do not even make a sentence..and the article suggested the use of such news by our in competent p[political and Indian administrative class that would make such a plan , hollow if not implemented well...but i guess, the implementation, execution and the plan itself is confusd by some like you...please be rest assured that when comments make sense however diff from my view, they are adhered to whilst those without any sense nor dialogue in them, would not be contested further

  14. Raising of the New Corps

    Good words indeed, but will they transform upon ‘becoming deeds’?

    Has the MoD and the Govt formulated a plan to halt the gap of shortage of personnel already prevalent in the I.A . It definitely is not going to do so by neglecting supreme courts directive on OROP or their dictate on the GC vis a vis Shimla Agreement.How is it then going to cover for extra personnel meant for such projects? Or are such projects a ruse to bolster ones image, especially just before an upcoming elections. Or more sinister, is the Govt and MoD in a self protective mode being made aware of the dangers at India's doorsteps having a doubling effect due to their own apathy and mismanagement.
    Look at the track record of the Govt and MoD previously boasting of spending a million here and there to strengthen the country only to stop the procedure midway. Where has that money gone? Is it wasted away as part of it was given at the initial stage of contract? Even if not the inflation and exchange rate escalates the cost.
    The game plan it seems is to Boast of Project 'A', allocate a million, and then years later stall the project mid way . Then declare the starting Project ‘B’, allocating another million, boosting ones image as working towards the defense of the country.
    The economics of the million allocated for the now stalled Project 'A' , is not questioned nor answered as the clarity of accounts get blurred with passage of time of it being sanctioned and it being stalled.
    Whilst now 2 million are supposed to have been sanctioned, in reality was the same million which was allocated to Project ‘A’ now being used for Project ‘B’ , or is it that the million of the stalled Project 'A' is diverted elsewhere
    The economic dynamics gets more complicated and lost in time as Project ' B' nears its stalling time.
    Is it this juncture when a FM states global economic slowdown to cuts down the defense budget while allocating more than 10 crores on failed projects just to stay in Power. Did the stalling of defense Project 'A' and Project 'B' and monies thereof in any way aid the Govt in doling out funds for the sops, to stay in power.

  15. In short, has stalling defense projects midway become a tool to salvage and fund some personal projects?
    Thus the report of making of additional corps especially with an existing deficiency of personnel in the armed forces and the contradicting workings and track records of the MoD and Govt make a good ping on some radars and thus my thoughts.

    Could the report of creating additional Corps be as/for
    1-a) False Propaganda--Elections are near:-

    Either the MoD has been told by the Govt, or the MoD itself has devised a plan keeping in mind the upcoming elections, to go into propaganda overdrive , justifying being in slumber by showcasing a false 'Finger on the Pulse' of the Govt. (The Govt if not in slumber wud have primarily addressed the 'why's of deficiency of manpower and equipment already existing in the forces)
    The MoD personnel will then rue for promotions (The same MoD who meted out a recent directive that the Indian soldiers would be denied the Geneva Convention due to the Shimla agreement or denied OROP.)

    1-b) Protective mode – No Future ‘ Nehruvian Report’ :-
    Globally Scenarios evolving are affecting every country, making it arbitrary for each including India's allies to look after their own backyard first in contrast to aid an ally.
    Those in power for now 2 terms or 10 years know that they would not be able to protect themselves against a report akin to 'Nehru-vian Blunder if a 1962 episode or Kargil like scenario were to suddenly erupt just before or after the elections.
    Thus propaganda is needed that would stand alibi to obscure any reports in the future akin to 'Nehruvian Blunder' attributed towards those in Power today.

    Whilst in reality defense projects keep getting stalled and India's diatribe disguised as ‘Diplomatic Posturing’ having fooled no one managed to get negative results, these showcase themselves as 'strengthening the country's defense

    It is evident enough that India’s sympathetic bowl no longer evokes response whilst her adversaries are getting stronger and bolder.
    This alibi also enables the Govt and MoD to have sloppy shoulders and shift the blame entirely on the Armed Forces when another 62 or Kargil situations erupt . After all hadn't the Govt and MoD sanctioned new corps and funds and worked towards the defense of the country? No matter that the army's ailment is shortage of staff and that up gradation projects are nearly always stalled--these get obscured with time.

  16. Was there ever a report indicting the MoD and Supreme Commander of India's Armed forces after the Kargil war? Yet there were reports pointing fingers at the armed forces, the intelligence, after all the Messenger had to be shot.

    2) THE REALITY CHECK: - Track record of Govt and MoD. The percentage of defense projects being stalled to them running their contracts are alarmingly high. If corruption is not the ruse to stop a project , we have two arms of the MoD under whose leadership up gradation has stalled.
    The French are not happy with HAL’s ability for making the rafaelle, on the other hand DRDO blames an Israeli firm of not spoon feeding them and thus the LR-SAM which was supposed to be in inventory last year. " Expecting Israel to share its technology with India is unfair''. Said an official.With a magic wand the 'discussion stage' even supersedes and overlaps the delivery time according to the contract.( .
    Where is the deal as of today after 7 years? Answers an official: - “Frankly speaking, right now, not much is going on in the joint venture due to various issues between the two sides”. This after the delivery date of 6 years has expired last year!!!!
    In any case , the missiles are not there, where is money that the MoD and Govt showcased as being used to strengthen the nation. In reality, is the same money going to be used for another Defense budget wherein the MoD and Govt boasts of allocating another millions?
    Mind Bogling is how can a negotiation fail at a stage of weapons delivery wherein according to the contract? Who signed the contract and if it was not properly scrutinized, is someone answerable?“But such things should have been clarified before the joint venture was entered into, said an official” on the fall out on the Israel- Indo defense deal signed in 2006 and failure in 2013 wherein 2102 was the delivery date.

    HAL/DRDO: These MoDs branches have in the last few decades graduated to being the world’s only establishment in wanting the consumer to buy figment of imaginary equipment. The recent report hinting corruption in procuring a trainer by the IAF in contrast to buy a’ to be made plane’ highlights amply the focus of these branches to blackmail the personnel of the armed forces into accepting their demands or being painted with a jaundiced brush.
    Point is, are these used more efficiently to drain/chanelise resources away from actual increase in inventory. They are always on the ‘threshhold’ of making and delivering and thus according to some Reports, indicate that the I.A had to fight the kargil war without the Gun locating radar as DRDO stalled the procuring process just before the kargil war as they were on the threshold once again of making one. Where has the money gone allocated for the GLR . Was it diverted elsewhere?

    Reality could just be that the future corps would be on paper and the money meant for it channelized to stay in power. The Chiefs have a task ahead of them in not only ensuring that the making of corps is done in a professional manner and in tune with modern warfare but also to make sure that such is not just a ruse to channelize money elsewhere by stopping the process mid way or as a propaganda stunt before the elections to protect their (Govt and MoD) future by disguising the mis deeds of their past.
    One thing is common in all these deals and scrapping the deals. Either DRDO/HAL has scuttled it as they were in the threshold of making the product or there erupts a corruption charge. Another common factor is that the blame being shifted only on to the higher echelons of the Armed forces. Fall guy is the one who jumped to the dangling carrot and ok'ayd what wasn't—The MoD and the Govt will thus go scott free--always

    Rustom Jamasji
    21 Nov 2013

  17. @ Rustom

    Without a doubt, you are the single most uninformed person posting on this blog.

    And you're not just tactically, operationally and strategically clueless... you're also verbose. You make a one paise point in two rupees.

    I suggest you stop posting on this blog. Go back to wherever you've emerged from.

  18. @ghorcharrah gabbar, Bang on target as usual sir.

  19. The Strike Corps is a little too late. China has stolen a march resources over us more than a decade ago and we don't have the resources and are unlikely to get them, to match them in the mountains. We have other urgent strategic requirements. I suggest we make peace with China and secure our Northern Borders early

  20. The correct thing is to do away with the Army itself. It'll not just save lots of money but spares lots our manpower for very productive employment like CCS, forest-walas the accountants etc who inhabits in our defence ministry in hordes. Same can be done for Navy / IAF also. As there are precision guided weapon systems, drones, cyberwarfare tools etc are "available"(With the boys who developed it) these can be operated by MoD directly employing the growing Army of IDAS, MES, DRDO etc. The result is that alround happiness and bliss.


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