Budget: Navy and air force modernise, army remains mired in high personnel costs - Broadsword by Ajai Shukla - Strategy. Economics. Stuff.

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Monday, 4 February 2019

Budget: Navy and air force modernise, army remains mired in high personnel costs


By Ajai Shukla
Business Standard, 5th Feb 19

The defence Budget, which the Union government presented on Friday, underlines that each of the three services remains locked in its own expenditure pattern. The army, which most requires modernisation, continues allocating well over two third of its budget to salaries and pensions, leaving just a little over one-tenth for new equipment.

The navy manages manpower best, spending just over a quarter of its overall budget on personnel costs. Despite having the lowest capital allocation, it will still spend a healthy 45 per cent of its budget next year on new warships and equipment.

The air force spends the largest percentage – about half its budget – on modernisation and the purchase of new equipment. That is partly because it has by far the largest capital budget of all three services – Rs 39,303 crore, compared to the army’s Rs 31,815 crore and the navy’s Rs 25,541 crore (including Coast Guard allocations).

Breakdown of services’ budget

(in Rupees crore)

Year
Manpower
(salary + pension)

Non-salary revenue (A)
Capital allocation (B)
Non-manpower costs
(A+B = C)
Total service budget
Ratio spent on manpowr
Ratio spent on new equipment
Army*







2017-18 (Actual)
170302
41185
29962
71147
249577
68%
12%
2018-19 (RE)
181109
42246
29055
71301
252410
72%
11.5%
2019-20 (BE)
190399
44884
31815
76699
267098
71%
12%








Navy^







2017-18 (Actual)
12370
12499
22298
34797
47167
26%
47%
2018-19 (RE)
14881
14186
23141
37327
49697
28.5%
46.5%
2019-20 (BE)
15596
15251
25541
40792
56388
27.5%
45%








IAF#







2017-18 (Actual)
22274
11978
34918
46896
69170
32%
50.5%
2018-19 (RE)
26374
11989
35770
47759
74133
35.5%
48%
2019-20 (BE)
27316
13016
39303
52319
79635
34.5%
49.5%
(Source: budget documents)

* Including Border Roads, Rashtriya Rifles, J&K Light Infantry, National Cadet Corps
^ Including Coast Guard and Joint Staff
# Including Special Projects

None of these expenditure patterns have changed over the last decade. Officers responsible for preparing budgets say their detailed costing projections are mostly ignored. Instead, the defence ministry simply takes the previous year’s budgetary allocations for each service and adds a small percentage to those.

For that reason, budget allocations barely diverge from a simple formula: give the army 60 per cent, the air force 24 per cent and the remaining 16 per cent to the navy.

These are the figures that have solidified after the implementation of One Rank, One Pension (OROP) effectively doubled the pension bill, and the 7thCentral Pay Commission recommended across-the-board salary increase. The army, already hamstrung by untenable personnel costs, took the largest hit from these.

The army hierarchy is only now coming to terms with the realisation that it will have to prune numbers to have a substantial sum left for the rifles, personal protective gear, man-portable missiles and artillery guns that it badly needs. For decades, it has justified its large size by stating that “boots on the ground” are essential for manning the sprawling mountain borders with China and Pakistan.

The Parliament’s Standing Committee on Defence has recommended revamping personnel policy, as have successive committees in recent years, including the Naresh Chandra Task Force and the Shekatkar Committee. 

Only now has army chief General Bipin Rawat ordered a sweeping reorganisation that could see a major reduction in the army’s “tooth to tail ratio”, including an unprecedented reorganisation and pruning of the Army Headquarters. In addition, there could be a shift to shorter service tenures for soldiers, which would reduce the government’s pension liability and greater promotion mobility for officers.



3 comments:

  1. Using the above charts its obvious that manpower is an issue with the army. To counter the issues with the army's manpower they must really try and rethink if they really need 1.3 million strong active duty army. To reduce the financial burden. They need to do the following things

    1. Look at ways to reduce manpower. They can draw on their reserves when the need arises. Redundant roles in the army must be removed. Now that we are getting new artillery pieces we really need to reduce the men that need to man artillery. Wheeled artillery pieces can help reduce artillery crews and provide the shoot and scoot capability
    2. They must organize themselves in theater commands. The paramilitary forces of India should be put under one organization and must be reorganized in the same theater commands as the army. This way if a war does break out they can assist the army in their manpower needs.
    3. They must look to make their equipment common. They have too many different types of equipment. So many different types of small and heavy arms, grenade launchers, recoilless rifles, rocket launchers, light and heavy vehicles, utility, engineering vehicles, armored vehicles etc. Standardization of equipment not just among the army but also among the paramilitary forces of India will help achieve massive economies of scale which will help the MOD to negotiate with vendors in a position of strength.

    The air force also needs to standardize their equipment. The navy is doing well. But all the three services need the government to help them get the money that they need. Starting to read the budget requirements of the armed forces and allocating the budget accordingly will be great start. Holding the funds that are set out in the defence budget rather than giving them back to the Finance ministry will also help a lot. Lastly they should set up a public National Defence Fund which allows the public to donate funds which can be used to fund the military.

    ReplyDelete
  2. The civilian staff has to be cut to 25%. All of them need to be exservcie men.
    The current civilian employees need to be drafted into TA and sent on compulsory anti imsuregncy duty.
    This will cut down pension budget and also form a reserve during times of necessity.

    ReplyDelete

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