Defence modernization funds cut by Rs 10,000 crore; Army operations may be hit

The modernization budget of the armed forces has been slashed by around Rs 10,000 crore in a major jolt to them in the New Year. The cut is contrary to defence minister A K Antony's earlier promise of a hike in the defence budget to cater for the threat of the expansive China-Pakistan military nexus.

The finance ministry conveyed the decision for the Rs 10,000 crore cut in the capital acquisitions for the Army, Navy and IAF to the defence ministry, arguing that fiscal adjustment was necessary since the economic situation was grim, said sources.

The move will lead to a major slowdown in the ongoing acquisition projects—ranging from aircraft and helicopters to howitzers and missiles .
It also makes it clear that the already much-delayed $20 billion MMRCA (medium multi-role combat aircraft) project to acquire 126 fighters will not be inked anytime before March 31.

IAF had been assured an additional Rs 10,000 crore to cater for the first instalment of the MMRCA project—under which final commercial negotiations are underway for French Rafale fighters—if inked within this fiscal.

Antony, during a rare discussion on defence preparedness in Parliament in May, himself had declared he would seek a hike in the Rs 1,93,408 crore defence outlay in the 2012-13 budget due to "new ground realities" and the "changing security scenario" in the backdrop of the China-Pakistan nexus.

But, now the armed forces' hopes have been dashed. As it is, they get much less than what they demand every year. The armed forces, for instance, had sought a defence outlay of Rs 2,39,123 crore this fiscal that would have amounted to 2.35% of the projected GDP for 2012-13, but got only Rs 1,93,408 crore, or 1.9%.

Then, revenue expenditure (day-to-day costs and salaries) in the defence budget continues to far outstrip the capital outlay for new weapons, sensors and platforms. The two stood at Rs 113,829 crore and Rs 79,579 crore, respectively, this fiscal.

"The actual capital acquisitions budget was even less at Rs 67,672 crore. First, the revenue budget (non-salary) was cut. Now, the capital outlay also has been hacked. The forces were on course to spend 67% of the allocated capital outlay by this time. Many projects will be pushed to the next fiscal," said a source.

While Navy and IAF are better placed, the real worry is the "critical operational hollowness" in the 1.13-million Army. The Army had projected a requirement of over Rs 10 lakh crore for the 12th Plan (2012-17) period to acquire new capabilities and plug huge operational gaps in artillery, aviation, air defence, night-fighting, ATGMs (anti-tank guided missiles) and specialized tank and rifle ammunition.

A crucial project during the 12th Plan is to raise the new mountain strike corps, with two specialized divisions for high-altitude areas, at a cost of well over Rs 60,000 crore. Dedicated for "rapid reaction ground force capability" against China, this corps will have its HQs in Panagarh (West Bengal) and add to the two new infantry divisions already raised at Lekhapani and Missamari (Assam).

Times of India