Defence Budget 2023-24: Getting more Bang for Buck

Despite the hype of India attaining the ranking of the fifth largest economy in the World, there is no scope for profligacy in spending on defence in the coming financial year 2023-24.

The number crunchers in the North Block the Headquarters of the Ministry of Finance headed by the Finance Minister Ms Nirmala Sitharaman are well aware of this reality.

Ms Sitharaman who has also been the Defence Minister of the country albeit for a truncated period would be aware of the necessity for funding defence forces running expenditure known in the financial parlance as the revenue budget and their requirements for acquiring what some call “toys for the boys,” or the capital acquisitions.

Yet Ms Sitharaman who will be presenting her last full budget as the Finance Minister during this term of the Lok Sabha on February 01, will have to balance diverse demands for budgetary support in the next 18 months being the “election year.”

With 10 State elections scheduled for this year including that of the Union Territory of Jammu and Kashmir followed by the General Elections to the Lok Sabha and some state bodies in the first half of 2024 – populism will remain at the peak – which is not unusual for any government in a democracy as India.

So if Ms Sitharaman provides sops to the Middle Class of which she proudly claimed to be a part of, she cannot be blamed as any other finance minister in her place of which ever party may have had to take a similar approach.

The short point is fiscal resources available for the Defence Budget 2023-24 are likely to be restricted and the armed forces will have to not only priortise but also economise and there is ample scope for the same.

To highlight a few opportunities for economy, the first is on deployment of troops on the Line of Actual Control (LAC). While there are no official numbers but varied figures of 40,000 to 60,000 are being quoted by the media.

The LAC has now been stabilized just as it was expected to attain the profile of the Line of Control or LOC with Pakistan.

The main threat on the LAC for now is a Yangtse type of intrusion which will occur on some of the disputed areas or on areas of tactical importance which are perceived to be weakly guarded.

A realistic appraisal of such areas is essential to review the deployment profile while maintaining adequate troops in reserve.

With availability of extensive surveillance resources if properly utilized there would be sufficient indications of a People’s Liberation Army (PLA) build and time for response.

Measured operational mobilization will prevent being surprised as in 2020. Yet this exercise will have to be carried out at the theatre level as commanders on the ground have to be given well defined tasks avoiding ambiguity.

Sizeable savings can accrue in addition to preservation of men and morale as well as wear and tear of equipment which are expensive in the high altitude areas.

Similarly, the Annual Review by the Ministry of Defence informs us that the Indian Navy has adopted Mission Based Deployment at chokepoints in the Indian Ocean.

This may have been deemed operationally necessary in the interest of maintaining maritime domain awareness of the Indian Ocean Region (IOR) but there should be a scope for reducing deployment which is expensive replicating in some ways that of the Army on the LAC or LOC.

Apart from the impact on the revenue budget, affordable maintainability of some of the critical platforms such as submarines can be achieved by occupying the most sensitive while covering others through less expensive resources.

On the capital allocations front, the criticality is getting the aircraft carrier INS Vikrant going and the S 400 squadrons in place. Upfront payments for these may have been planned.

In some cases, leasing option could be exercised effectively while super expensive schemes as the Predator drones for the Navy could be kept floating to show the Americans that we are interested while exploring other options.

What About the Numbers?

As far as the numbers based on incrementalism if the total outlay for Ministry of Defence for BE 2022-23 was budgeted at Rs 5,25,166.15 Crore and Outlay excluding Pensions at Rs 4,05,470.15 crore, a Rs 50,000 Crore increase can be estimated which in fact may imply given the inflation a defence budget which remains at the same levels as the previous financial year.

There is no scope for any exponential increase in an election year apart from other factors thus the necessity for economizing as outlined above. In fact an in depth study will provide many more options without reducing operational effectiveness.