The Union Budget is not just about numbers; it is also an important statement of how the government intends to fulfil its election-time promises and deal with other sector-specific issues. Considering that it has been just five months since the interim budget was presented, there is not much scope for any substantial rejig in the regular budget. It is more likely that, being the first budget of the present government, the finance minister may end up setting the tone for the next five years and make some adjustments in the budget outlay to support the policy pronouncements when she presents the regular budget for the current financial year on 5th July.
That would be normal, but what could make her speech extraordinary is if she also unveils, at the very least, the government’s plans, both in terms of policies and possible financial outlays, for the next five years, to deliver on her party’s election-time promises concerning defence. After all, apart from being a matter of utmost importance, defence also accounts for nearly one sixth of the total central government expenditure, without this being of any comfort to the defence planners and analysts.
In its 2019 election manifesto, the Bharatiya Janta Party had made two sets of promises: to speed up procurement of weapons and equipment for strengthening the strike capability of the armed forces and to focus on ‘Make in India in Defence’ to promote indigenous production of defence equipment as a means of achieving self-reliance, encouraging investment and generating employment.
Citing implementation of the one-rank-one-pension (OROP) policy as an indication of the party’s commitment to welfare of the soldiers, the manifesto also promised to create a more effective framework for resettlement of soldiers three years before their retirement, in accordance with their preferences, through skill development and by providing financial support for higher education, housing and starting an enterprise.
For sure, there are many other problems that need to be fixed, but in a broad sense these promises subsume a large number of issues faced by the defence establishment. It would, therefore, be a great achievement if these could be resolved. But fulfilling these promises would require a well-thought-out overarching plan of action for defence reforms and infusion of large sums of money over a long period of time. As of now, no such plan for comprehensive reforms or a roadmap for funding such reforms are in place.
With a mere 6.6 per cent increase with reference to the budget estimates of the previous financial year, the total defence outlay proposed in the interim budget for 2019-20 is inadequate to either accelerate defence acquisitions or launch new resettlement schemes for the ex-servicemen, not to mention making up of the war wastage reserves, proper maintenance of in-service equipment and infrastructure, new raisings and so on.
Going by the forty second report of the Standing Committee on Defence (SCoD) of the 16th Lok Sabha, there was a gap of more than Rs 1,12,000 crore between the requirement of funds projected by the armed forces and the actual allocation in 2018-19. This has been the trend for several years now. The situation may not be very different this year also. This then is the biggest challenge for the finance minister in purely financial terms. It would be unrealistic to expect her to start tackling this challenge starting with the coming budget.
Given the constraints in raising the volume of government revenues in any substantial measure and the imperatives of balancing competing demands from other sectors – health, education, agriculture, infrastructure, et al – all that can be realistically expected from the budget is a marginal increase to meet the obligatory expenses, honour contractual liabilities and cater for signing of some new contracts that may be inescapable or on the verge of finalisation.
This budget, therefore, cannot be about a substantial hike in the outlay for defence. It would be disappointing if, continuing with a past practice, the finance minister punctuates her speech with platitudinous assurances that there is no shortage of funds for defence and the promise that additional sums of money will be made available, if required. She need not make the kind of promises which have not been kept in the past. There are many other things that she could instead consider squeezing into the limited time that can be devoted to individual sectors in the budget speech.
First, it would be good if she were to announce setting up a task force to prepare a pragmatic blue print of how the defence outlay could be raised substantially, if not to three per cent of the gross domestic product – widely seen as the answer to the financial woes of the armed forces – without any consequential adverse impact on any other sector. This could pave the way for evolving a realistic roadmap for long-term budgetary support for defence plans in future, starting from the next fiscal.
Second, several steps were announced in the budget speech in the past five years ranging from setting up of a Defence Technology Fund to launching of the Defence Industrial Corridors project. All these efforts may not have produced the desired result so far or may still be work-in-progress. An honest account of the outcome of these efforts and the steps being taken to ensure that the intended objectives are achieved would be reassuring.
Third, the finance minister needs to clear the air about withdrawal of exemption on disability pension and the delay in the first round of upgradation of pension under OROP which was due from July this year. These issues are exercising the minds of the two million plus community of defence pensioners. There cannot be a better opportunity to assuage their anxiety.
(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)