India’s Defence Budget 2017-18: Should Alarm Bells Ring?
The share of defence expenditure in 2016-17 has gone below the levels it was in 1955-56. In 2017-18 it will go down to 1.557 per cent of GDP.
- Vinay Kaushal
- February 10, 2017
India spends a significant amount of resources on its national defence. Efficiency in utilisation of resources is not only an economic imperative but vital for defence preparedness. In view of this, the Defence Economics and Industry Centre was created in 2006 to promote research on various economic aspects of India’s defence. Since its inception, the Centre has undertaken a number of policy relevant studies besides constantly engaging vital stakeholders (Ministry of Defence, Armed Forces and Industry) on a range of issues. The major focus areas of the Centre are:
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The share of defence expenditure in 2016-17 has gone below the levels it was in 1955-56. In 2017-18 it will go down to 1.557 per cent of GDP.
Budget is not just all about figures but also a statement of policy. The Defence Budget for 2017-18 contains no hint of any intention of the government to bring about a paradigm shift in the defence policy.
There is a need to go beyond stale issues and have a more meaningful and dispassionate discussion on how to make the best use of the allocations made for defence.
The BEML model of disinvestment needs to be applied to the rest of the Defence Public Sector Undertakings as well as Ordnance Factories.
With some innovative thinking, on-line arrangements with suppliers, including the Canteen Stores Department, could reduce the cost of storage and distribution and, more importantly, help in maintaining a high satisfaction level among troops.
Higher Defence Management, Civil-military relations and force modernisation were three critical areas in which there was little or no movement in the year gone by.
The biggest lesson that India can borrow is France’s integrated and centralised procurement structure, which has the dual responsibility of arms acquisition and defence industrial development.
The Papua New Guinea Defence Force (PNGDF) is preparing to undergo a major expansion programme. India can assist in enhancing and developing PNGDF’s capabilities without coming into conflict or competition with the Australian interests.
Should GRSE and GSL deliver satisfactory services to their export customers, there is considerable potential for India to position itself as a competitive supplier of small and medium warships and patrol crafts.
It is rare that a foreign company makes a huge investment to produce major platforms in a third country with a view to make that country an export hub.