Military Spending : More Bang for the Buck?
You have to have the powder to keep it dry
A nation maintains its military as an instrument of national power and means of safeguarding national interests. Military capabilities in turn mean expenditure. Universally countries spend in proportion to their economic development or in direct response to immediate security threats. But we seem to be guided by neither.
Budget speeches by Finance Ministers barely touch on military expenditure much less generate any debate in public or Parliament as to what the country needs or can afford to spend on its defence.
The defence budget today as a percentage of the GDP at 1.56% is the lowest since 1962. Statements that defence spending today is the highest ever misleadingly use rupee terms to gloss over value terms. It is quite clear that we as a nation are unable or unwilling to spend what is required for national security.
What then is the alternative? Perhaps improved efficiency and accountability in areas of major defence spending can ameliorate the situation, or as the Americans say getting more bang for our buck.
Adequate spending under ‘capital’ for hardware acquisitions is a major issue in itself; however, sustaining and keeping the military fully functional falls in the domain of ‘revenue’ expenditure which is more or less obligatory.
Myopic considerations project the ‘revenue’ expenditure as a share of the defence budget as excessive, ignoring the fact that inadequate defence spending leaves less for ‘capital’ and projects ‘revenue’ as excessive.
Knee jerk reactions like selectively increasing retirement ages to reduce pension outlays, merging unit cook houses, constructing temporary shelters or accepting 70% effective equipment, etc, as suggested by some military planners for reducing ‘revenue’ expenditure are no substitute where major surgery is required.
Besides many other areas in the defence production base, one of the major contributors to the military’s war-waging potential is the availability and holding of ammunition: which is ‘revenue’ expenditure, much sought to be curtailed.
And ammunition is where the real ‘bang’ lies. This is expressed in military jargon as War Wastage Reserve (WWR) and is expressed in the number of days of WWR, indicating how many days of fighting the available ammunition would allow.
Without going into specifics, it is well known in the open domain, as highlighted by the Army Chief in 2013, that our holdings are abysmally low, thus putting a serious constraint on our military options. During the localised and limited Kargil 1999 operations we had to resort to emergency purchase and airlift of ammunition from abroad and other theatres.
The problem is further compounded by a fair proportion being imported and serious issues of domestic production and quality. Modern munitions are high-precision products requiring stringent quality control. Defective ammunition leading to accidents and casualties has been the bane of the soldier and most damaging to morale.
No heads have ever rolled in the production agency: it is always attributed to ‘improper’ handling by the user.
Such ammunition, segregated and destroyed, is a total loss. On the other hand, defective ammunition stored in ammunition depots has triggered more than one major accident resulting in losses worth thousands of crores. Recently the entire holding of one type of air defence artillery ammunition was declared defective and unfit for use.
These deficiencies leading to ‘hollowness’ in the War Wastage Reserve cannot be made up in a hurry even if the amount required were made available—and then there are considerations of transport, and making the necessary available where it is required.
The sole domestic supplier of practically everything from uniforms to armaments, armoured vehicles like tanks and ammunition are the Ordnance Factories under the Ordnance Factory Board (OFB) comprising 41 Ordnance Factories subordinate to the Department of Defence Production (DoDP) under the Ministry of Defence (MoD).
The OFB has 82,000 employees, holds over 60,000 acres of land and has nine Training Institutes, three Regional Marketing Centres and four Regional Controllers of Safety. More than 80% of its orders come from the Army although it barely meets 50% of Army requirements.
The OFB’s archaic structure and red tape preclude any meaningful efficiency, dynamism, or modernisation of plant and machinery. Accountability, like in all government undertakings, is non-existent.
A media report of December 2019 citing the Comptroller and Auditor General highlighted shortfalls in production ranging from 32–74% in various types of fuses, and in ammunition from 41–94% with material and quality problems with munitions worth Rs.1,403 crore lying unusable with the Army.
Overheads constituted 33% percent of the OFB’s annual budget. The Ordnance Factories achieved production targets for only 49% of the items. A significant proportion of Army demand for principal ammunition items remained outstanding. Orders as old as 2009–10 had yet to be delivered.
Over half the inventory (52%) was the store-in-hand sort procured for manufacture but the factories hadn’t used it within the year. Unfinished items lying on the shop floor constituted 32% of inventory. Unusable stores worth Rs.1,055 crore were awaiting disposal.
It is explained that the shortage of ammunition will be made up by ‘surge capacity’ of production, while normal production has not been achieved.
Then there is the high cost of OFB products. For example, the 1.3 million strong Army procures combat uniforms from the OFB, which buys the cloth and outsources the stitching, charging four times the cost!
It was in autumn 1914 that a shortage of artillery shells forced the British Army to ration them on a daily basis on the Western Front. The Shell Scandal so called caused the fall of the government; the following year a Munitions Act would be enacted to curtail any impediments, including labourers, in the production of munitions.
That was then. Today we do not have the luxury of a long-drawn war of attrition to rectify such fatal shortcomings.
An overhaul of the defence production base is long overdue. There has been no dearth of committees recommending change: the TKA Nair Committee (2000), Vijay Kelkar Committee (2005) and Vice Admiral Raman Puri Committee (2015) recommended corporatising the Ordnance Factory Board.
And there has been no lack of expressed intent, most recently by Finance Ministers Arun Jaitely and Nirmala Sitharaman. In August 2019 the government announced the decision to corporatise the OFB, following which 60,000 OFB employees struck work for a month—and a committee was constituted to address their concerns!
The Indian soldier has seldom been found wanting in individual courage, tenacity and commitment to his or her calling, but individual courage is no substitute for proper and reliable equipment.
You have to have the powder to keep it dry. The least we can do is ‘Make in India’ what is being ‘Made in India’.
Lt General N.S. Brar is retired from the Indian Army.