Defence Expenditure

Given the rapidly rising pension liability in India and the concern expressed by the CDS, the experiences of the US and the UK could be useful in carrying out pension reforms in India.

The present crisis is as much of a challenge as an opportunity to infuse financial realism in defence planning and bring about concomitant reforms in the quickest possible timeframe.

Reforming defence pension is no more an option but a compulsion considering its exponential growth in the past, which is likely to continue in the future if no reform is undertaken.

Considering that the defence capital expenditure already accounts for a very high share in the central government’s overall capital spend, any substantial hike in the former’s share looks less likely. This is more so given the government’s priority to spend on infrastructure and other non-defence capital assets to revive the economic growth.

Even if the Fifteenth Finance Commission manages to make a specific recommendation about the funds to be allocated for defence and internal security and the government accepts the recommendation, there can be no guarantee that the actual allocation will not fall short of the accepted level.

It would be nice to see the defence ministry setting up a task force and submitting actionable recommendations which could be considered by the finance minister while deciding the defence outlay next year.

The eight per cent hike in the interim defence budget 2019-20 is bound to further intensify the resource problem of the MoD, which is already battling a massive shortage of funds.

Defence capability building and capability sustenance have been adversely affected over the past decade because of inadequate allocations and the status quo approach of the Defence Services.