It’s especially tough for low-income countries like India, with low taxation multiples. For example, the US has a tax-GDP ratio of 28%, enabling it to spend 3.5% of GDP on defence. India’s tax-GDP ratio is 17-18%, leaving far lesser flex with policymakers. Even then, defence accounts for the single-largest allocation in the budget (after debt servicing), it takes up 13%.
The share of salary and pensions in the defence budget has remained above 50% for over a decade. In the interim budget, the share was 53%. OROP has jacked up pension liabilities indefinitely. This has come at the expense of modernisation and war wastage reserves. Unsurprisingly, every skirmish on borders sparks off ’emergency purchases’ to stock up on spares and ammunition. As the war in Ukraine has shown, surge capacity in the military-industrial complex either doesn’t exist or is reserved for oneself or treaty allies. Consequently, we invariably pay a bomb for these emergency procurements.
Indian military’s penchant for imports – it’s the largest importer of military gear in the world – complicates the scenario further. Unlike civilian capex, the bulk of defence capex, being imports, doesn’t have multiplier effects on the domestic economy. Rafale, for example, is a high-value capex, but has minimal economic effect in India. In contrast, high defence expenditures of the US, China and Russia go back as a multiplier into respective domestic economies. This adverse equation crimps fiscal flex further for policymakers.Till 1976, the Army had a version of Agniveer – recruits enlisted for active service for 7-10 years followed by reserve service for 5-8 years. Costs were kept low, as reserve service had a nominal stipend, and at the end of 15 years, the reservist retired with a pension much lower than regular service pension.India fought all its conventional wars with a force having a large component of Agniveer equivalents. The programme also kept the average age profile of the Army young. Today, the average age in the Indian military is 32 years, far higher than the global average of 26. This is ironic, considering India is one of the youngest countries in the world.A version of Agnipath – via conscription, national service, or Tour of Duty (ToD) – is de rigueur in most militaries to keep personnel costs low. Around 30% of China’s PLA are conscripts. The Russian military is largely conscripted. Israel depends on national service. The US has a large proportion of ToD personnel, who serve for a few years – less than 20% of personnel reach pensionable service tenure. Surely, if a model is good enough for the best and biggest militaries in the world, an adapted version should be good enough for us?
Indian Navy commissions billion-dollar warships without sonars, and choppers worth a few million. The Army inducts six Apache gunships (outlay of $1 b), when IAF already has a fleet of 22, duplicating and increasing logistics costs. The Army has an assault rifle fleet of three different calibres – perhaps the most expensive assault rifle programme in the world.
While there has been some movement on structural reforms – chief of defence staff (CDS) is formally institutionalised now – progress has been painfully slow. Inter-service rivalries have stymied progress despite significant political capital invested. It was darkly ironic that a few days ago, while Indian military commentary was focused on pension/ex-gratia minutiae, China unveiled J31, its second 5th-gen fighter.
In 1962, Lata Mangeshkar’s evocative voice rallied a demoralised nation around the military. Unfortunately, all conversations on and about the military have been coloured by ‘Ae merewatan ke logon’ sentiments. It’s high time we had clear-eyed, dispassionate analyses, debate and decision-making to prepare for a turbulent world. Agnipath is part of that toolkit.