The recently concluded three-day international seminar on Defence Finance and Economics, organised by the Indian Ministry of Defence (Finance) in New Delhi, covered a wide variety of issues concerning defence finance and economics and reflected on varied perspectives and practices from across the globe. The seminar was of particular importance because of the involvement of policy makers, academics, and other experts from think tanks and the media, in exchanging and discussing their views in the realm of the changing business and spectrum of defence worldwide.
The primary objective of inventory management for the defence forces is to sustain and update their capabilities to perform the tasks given to them. The study of defence equipment purchase is normally confined to arms and equipment used for countering external aggression, although specialised equipment for surveillance and weaponry used in close combat situations especially in urban areas or those which result in little collateral damage are also utilised by the armed forces in anti-terrorist or counterinsurgency operations.
The Government of India and the Ministry of Defence (MoD) have initiated several reforms in the areas of budget and accounting. The reforms are ongoing and take into account the changes in other similar systems abroad and international best practices. The focus all over the world is to operate in a continuum of long-term plans, medium-term plans, annual plans, on the one hand, and allocations, targets and outputs on the other so that stability in budgetary allocations, accountability of the budgetholders and transparency in the processes can be ensured.
Procurement of new weaponry and equipment for the armed forces is a long, complex and arduous process. Funds involved are enormous and the quality of equipment selected has a profound influence on national defence potential. Therefore, most countries have evolved elaborate procedures aimed at procuring the most appropriate equipment at affordable prices.
The contents of the general, as well as, the defence budget of the Government of India have normally been widely discussed and debated. However, the focus mostly has been on the magnitude of the budget rather than the system of budgeting. Yet it is the system that needs to be the focus of discussions and requires reforms. Over a period of time, the budget documents had become quite static in terms of structure, content and communication of results.
Defence planning is essentially a subset of overall national level planning in the political, economic and social spheres and has to be evolved in the context of global and proximate factors affecting the nation. . It has also to take into account the philosophy and ethos animating the national psyche; in other words the historical and cultural forces which have shaped the collective memory and outlook of the people over the centuries.
It remains to be seen how the USA would "help India become a major world power" as the US Secretary of State stated a year ago, but Washington is certainly contributing to augment India's trans-national military reach in terms of its amphibious sealift and airlift capabilities. Last year, the US agreed in principle to sell India its Austin-class LPD (Landing Platform Dock) USS Trenton at a cost of US$ 42 million. The 17,000-ton Trenton is still in commission with the US Navy and is presently being refitted at Norfolk, Virginia.
Co-operation in the field of defence constitutes one of the most important features of Indo-Russian bilateral ties. However, the relationship is undergoing significant changes in the new context of market reforms and globalisation, as well diversification of acquisitions by India. Owing to the past legacy and ongoing projects, Russia will remain, at least for the foreseeable future, a major defence partner of India.
The Indian defence budget for FY 2006-07 is Rs 89, 000 crore (cr). This is 7.23 per cent more than the budget in FY 2004-05. As a percentage of GDP, the budget is 2.29 per cent as against 2.39 per cent in the previous year. Taking the revised allocation of Rs 81, 700 at RE (Revised Estimate) stage in FY 2004-05, the increase is 8.94 per cent.
Defence can seldom ignore the standard economic problem—the need to make critical often hard resource choices. Yet the output of defence studies focuses almost entirely on professional and strategic issues, and little on finance or economics. There is a presumption in most countries that the needs of defence must be met, and often they are met without
Impression on International Seminar on Defence Finance and Economics
The recently concluded three-day international seminar on Defence Finance and Economics, organised by the Indian Ministry of Defence (Finance) in New Delhi, covered a wide variety of issues concerning defence finance and economics and reflected on varied perspectives and practices from across the globe. The seminar was of particular importance because of the involvement of policy makers, academics, and other experts from think tanks and the media, in exchanging and discussing their views in the realm of the changing business and spectrum of defence worldwide.