Wars and arms: A tale of two ministries

A recent CAG report said our Army lacked ammunition to fight a war longer than
10 days. But it’s not all that grave

Published: 03rd August 2017 04:00 AM  |   Last Updated: 03rd August 2017 07:35 AM   |  A+A-

Only recently, Army Chief General Bipin Rawat assured the nation that the Army was well prepared for any eventuality and fighting “two and half wars (presumably one each against China and Pakistan, and half against terrorists and extremists inside the country) simultaneously”. But last week, the Comptroller and Auditor General (CAG) of India warned that the Indian Army, the second largest standing Army in the world, lacked ammunition to fight a war longer than 10 days.

Who, then, should we believe, particularly when there is a standoff between Indian and Chinese troops at Doka La? Perhaps, the truth lies somewhere in between, if one goes by the assurances from Defence Minister Arun Jaitley in the Rajya Sabha on July 25.

This was the second time in two months that CAG’s findings of inadequacies in India’s war wastage reserves (WWR)—military material held in reserve in case of war—came to light. As per our norms, WWR should be sufficient for 40 days of “intense” fighting, with 21 days earmarked for ammunition with shorter shelf life.
In May this year, the CAG pointed out that stocking of 125 of the 170 types of ammunition was not enough for even 20 days of war. “Further, in 50 per cent of the types of ammunition, the holding was critical or less than 10 days in March 2013,” it said.

In a report laid in the Parliament recently, the CAG said around 40 per cent of the Army’s ammunition, would not last more than 10 days in a war and that the military did not have the minimum required stock of 55 per cent, that is 61 of the 152 types, of arms it needed for operational preparedness in case of a war. Both reports show the situation has not improved much since 2013.

However, the problem with the CAG report is that it has not taken a comprehensive view of the situation. It has failed to appreciate the context of the decision making processes pertaining to the procurement of arms. Take the case of the WWR shortage. As much as 90 per cent of these ammunitions are supposed to be supplied by the state-run Ordnance Factory Board. But the equipment produced is not of great quality. As Lt General Sarath Chand, vice-chief of Army staff said July 25, the ordnance factories have not been able to keep pace with changing technology.

Secondly, there is an overall problem of shrinking budgetary resources for the “Capital Outlay on Defence Services”. The bulk of our defence budget is spent on “revenue” (salaries and perks) and maintenance of the existing resources, leaving little for developing and buying sophisticated arms and ammunitions systems. In case of the Army, the revenue side of the budget is as high as 83 per cent!

It is not surprising that the budgetary allocations for capital acquisition have declined for the three services not only at the RE (Revised estimate) stage of 2015-16 in comparison to BE (Budget estimate) 2015-16 but also for the RE during the year 2016-17 in comparison to BE 2015-16. Similarly, against a projection of Rs 1,46,155.54 crore for capital budget in 2017-18, Rs 86,528.65 crore have been allocated for BE 2017-18 for various services, according to a report submitted by the Standing Committee on Defence to the Parliament. This decline in the allocation for capital acquisition will definitely affect procurement proposals and contracts. For instance, in the capital budget for the Army during 2017-18, the BE projection was Rs 42,485.93 crore, but what was allocated in the end was Rs 25, 246.35 crore.

What is worse is that even these declining capital budgetary allocations are underspent most of the time. For instance, the Army was allocated in 2014-15 a sum of Rs 21, 933.54 crore, but it spent only Rs 18,586.73 crore. In the 2016-17 budget, the Army was given Rs 24,026.86 crore for capital acquisitions, but as on December 2016, the Army has spent only Rs 17,205.64 crore.

However, there is a catch. Though the Ministry of Defence (MoD) has to be blamed for not planning properly and thus surrendering the funds, the main culprit is the Ministry of Finance (MoF) for underspending. Towards the end of every financial year, efforts are made by MoF to withdraw unspent funds from all ministries to reduce fiscal deficit.

As the finance division of the MoD functions under the directions of the MoF, it does not clear any major expenditure unless given a green signal by the MoF, thereby forcing the MoD to surrender funds. The MoD now wants this practice to end. There are strong merits in its demand for the creation of a ‘Non-Lapsable Defence Capital Modernization Fund’.
Interestingly, Finance Minister Arun Jaitley, whose MoF usually plays the spoiler role in the acquisition process of the MoD, now has a moral dilemma. Because, now he happens to be the defence minister as well. Will he agree to the idea of Non-Lapsable Defence Capital Modernization Fund?
S

o far in his additional role as the defence minister, Jaitley has taken an important decision of giving the Army vice-chief full financial powers to procure critical ammunition and spares to maintain an optimum level to fight a short intense war. This means that procuring ammunition would be much faster. The vice-chief has been allowed to take the “revenue route” for in-service equipment; so there will be no need to head to the Defence Acquisition Council (headed by the defence minister) or the Cabinet Committee on Security, for procurement.

Besides, the government has recently created a separate fund of around Rs 20,000 crore (not a part of the 2017-18 budgetary defence allocations) for procuring ammunition and spares.
Viewed thus, the CAG warnings should not create a sense of helplessness. As Jaitely told the Rajya Sabha on July 25, “significant progress has been made (since the CAG wrote its report), procedures have been simplified, powers have been decentralised, and the armed forces are reasonably and sufficiently equipped”.

Prakash Nanda

Senior journalist, author and strategic analyst

Email: prakasnanda@gmail.com

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