Economics of Defence: Manpower Cost Costs Modernisation

Editor’s Note

The author addresses the issue of manpower costs affecting defence modernisation in our over a million army with refreshingly new arguments. It’s a fact that our salary bills consume a very substantial portion of our defence budget. There’s, as such, considerable effort periodically devoted to reducing manpower in units and formations. However, has an audit of the effects of such cuts ever been undertaken? When compared to armies globally, how are we placed in terms of percentage of the defence budget that goes to pay the salary bill? Our formation headquarters continue to attach manpower from field units just as our logistics units require beefing up to perform their allotted tasks. The author provides insight.

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Defence experts and analysts have for far too long been critical of ‘disproportionately huge’ amount of defence budgets being eaten up in meeting “defence salaries and day-to-day running costs”, referred as Revenue Expenditure, thus leaving very little for military modernization and capability development. This argument, having not been adequately contested, has gained traction over the years amongst the policymakers and also amongst a section of senior military leadership, giving rise to a perpetual pressure to cut down military manpower.

Image Courtesy: Awaaz Nation

Relative to the other two Services, the pressure has been maximum on the Indian Army, viewed as ‘manpower heavy’ and ‘manpower surplus’ force. Over the years, this has led to repeated and near-continuous initiatives by the successive governments and army’s leadership to crack down on army’s manpower under various pretexts to ‘rightsize’; ‘optimise’, ‘improve teeth-to-tail ratio’; ‘save and raise’; ‘outsource non-essential functions’ etc. Rightsizing the army, or for that matter, any organization, in keeping with its changing roles and environmental developments and felt needs, is a must and should be a continuous endeavour to be pursued yet, in case of the Army, no one has shown courage to define what is its “Right” size.

Of course, in absence of governments shying away from formulating national security strategy and defining what it expects its armed forces to achieve in various crises and conflict scenarios, the ‘right’ size of army would continue to be a vague idea.

Combined with it is an aversion to developing new war-fighting doctrines and concepts, with no one ready to take the risk of reducing the number of fighting units and formations. So, what do we get? We resort to status quo concerning the size of the force yet, incrementally cut down manpower from each sub-unit, unit, formations headquarters, training institutions etc., and then with a sense of achievement, boast of cumulatively having saved few thousand personnel. This is what has exactly happened repeatedly during the past two decades.

For some strange reason, despite the negative impact of these measures being known at the functional levels, the senior army leadership has avoided auditing the impact of these repeated exercises at shearing off of manpower. The truth is that today an infantry battalion cannot mobilise with its full loads with standard allocation of second-line transport; the infantry sub-units, despite reduced bayonet strength, cannot even carry its man-pack battle loads (on weapon scales of ammunition); combat engineer units are constantly seeking manpower from field units, yet are unable to complete operational works within stipulated timelines; MES (Military Engineering Services) contracts are routinely delayed since officers and JCOs (Junior Commissioned Officers) are unavailable to complete initial boards to define scope and technical specifications of the projected works in time.

Similarly, communication units are hard-pressed to execute their tasks optimally without resorting to adhocism or seeking manpower from field combat units; logistics services units being increasingly at the mercy of civilian contractors and transporters, are routinely drawing the wrath of supported units and formations; provost units and Movement Control detachments are unable to perform their routine tasks without attaching manpower or transport or both from, yet again, the same lot of field combat units; and to top it all, formations headquarters from brigade upwards to army HQ are unable to function without attaching few tens to hundreds of combat personnel from subordinate units.

In an effort to reduce the ‘tail’, the ‘tail’ has been cut so short that the ‘teeth’ are now being utilized to do functions of the ‘tail’. Thus, a state has been reached wherein firstly, we have impoverished the ‘teeth’ and secondly, a significant part of whatever is left of it, is routinely being utilised to do functions of the ‘tail’. This army-wide arrangement is causing immense pressures and stress levels at sub-units, units and lower formations level even during the so-called ‘peacetime’, manifestations of which would be extremely grave during operations and major conflicts.

Image Courtesy: The Indian Express

Analysts have repeatedly pointed out that over two-thirds of defence budgets go towards revenue expenses, 50% of which is to meet manpower costs (salaries) and balance to meet day-to-day running costs of the army, indicating that salaries of army personnel eat up nearly 35% of the defence budget. Let us examine whether this percentage of army personnel salary is unusual and whether it should be alarming. Few facts ought to be considered.

A 1993 research by Alan Heston (University of Pennsylvania) and Bettina Aten (Bureau of Economic Analysis, Washington, DC) titled, “Real World Military Expenditures”, sourcing data from multiple credible international sources including the UN, calculated real military expenditures in PPP (Purchasing Power Parity) terms of 134 countries of the world. The findings also indicated the percentage of defence expenditures each country incurs on its military personnel.

As per the report, India spends 33.7% of its total defence expenditure on salaries and  allowances of military personnel; Pakistan 41%; China 40%; Sri Lanka 41.3%; Bangladesh 40.2%; Nepal 40.1%; Afghanistan 36.8%; UK 37.5%; USA 40.6%; Canada 48.7%.

There are only five countries out of 134 which spend a lesser proportion of their defence expenditure on military personnel than India (Thailand 29.2%; erstwhile Yugoslavia 30%; Romania, Bulgaria and Poland each 30%). Most countries spend 40% to 55% of their defence expenditures on military personnel, with a few exceptions like, Ireland which spends almost 74.5% of its defence expenditure on military personnel. The findings of the report, though of 1993 vintage, mostly remains valid till date, with minor variations in respect of individual countries.

India thus is amongst the six countries of the world which, in PPP terms, spend the least proportion of their defence budget on salary and allowances of its armed forces personnel.

Image Courtesy: Rediff

The report quoted above counts all civilian personnel working in military establishments including the Ministry of Defence (MoD). In case of India, it must be noted that lifetime (in-service and post-retirement) government expenditures on non-uniformed civilian personnel paid from defence estimates, is much higher than their uniformed counterparts by virtue of 100% of them serving till 60 years of age and also because their faster promotions regime leading to them serving in higher salary brackets for longer periods. If expenditures on personnel are to be further reduced, is there thus a case to trim down or right-size the defence civilian cadre?

It is time to get real. There is so much and no more than the military manpower trimming exercise can yield without seriously undermining their operational effectiveness. There is no case for trimming down salary and allowances of military personnel either since Indian armed forces are amongst those few countries of the world which consume the least proportion of defence budget on salaries. Size of the Army remaining same, the manpower costs would virtually remain constant.

Reduced defence budget amount shall thus always show a higher proportion of manpower cost concerning the overall budget. Increase the defence budget amount and the manpower costs, as a per cent of the overall budget, will automatically come down. The solution is not in impoverishing existing units and formations by incremental cutting down of personnel from each unit, establishment or headquarters nor by the outsourcing of critical logistics functions where capacities, commitments and responsive culture in the civilian commercial domain are yet to build.

The solution may lie in cutting down entire units and/ or formations while keeping those which continue to exist, fully and optimally manned. However, any scope of an overall reduction of manpower may only emerge post formulation of a clearly and unambiguously articulated national security strategy and in its context, developing of new war-fighting doctrines which prescribe different ways of doing things, with newly available means, to achieve stated military mission objectives.

This process, when completed, can then be followed by integrating and restructuring the armed forces which may, and most likely lead to right-sizing. In the interim, while this holistic process is completed, the modernization would essentially need to continue by making higher allocations in defence budget rather than by seeking to further impoverish and imposing even higher levels of stress on military manpower.

Maj Gen AK Das (Retd)

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of BharatShakti.in)