Army Budgets Finding the Equilibrium: Shobhana Joshi

By Editor 15-Jan-2021

The ongoing debate on the Army budget focusses on its large share at 55.5% of the total allocation for Defence, with the major share of 45.5% for revenue expenditure,  and 10% for capital, in the current financial year. This is not a new phenomenon, given the size of the Indian Army of 13 lakh personnel.

Data from XII plan onwards shows that  allocation for army has been in the range of 55-56 % of the total defence allocations from 2016 -17 onwards. The  revenue allocation   increased from 40% in 2012-13 to 45.5 % in 2020-21 with spikes   in 2015-16 and  2016-17.The capital allocation, on the other hand had no substantial  increase, and after a marginal hike, has since declined. In fact, over a period  of  ten years, it has declined  from an average of 12% in the XI Plan to 10.5 % in XII Plan.


YEAR       Defence  BE    BE CAP       %       BE REV       %       TOTAL%

2012-13    1,93,407         19,238       10          77,327        40          50

2013-14    2,03,672         17,884        8.8        81,119        39.8       48.6

2014-15    2,29,000         26,533       11.6       91,844        40          51.6

2015-16    2,46,727         27,342       11         1,03,316      42          53

2016-17    2,49,099         26,936       10.8      1,12,765      45          55.8

Total        11,21,905        1,17,933    10.5       4,66,371     41.5       52

ARMY ALLOCATION 2017-18 TO 2020-21

YEAR      Defence BE       CAP        %      REV          %           TOTAL          TOTAL%


2017-18     2,59,262       25,206      9.7     1,19,962     46.3      1,45,168          56

2018 -19     2,79,305      26,816      9.6     1,27,060    45.5       1,53,876         55

2019 -20     3,05,296      29,461      9.6     1,41,501    46.3       1,70,962         56

2020 -21     3,23,053      32,392     10       1,46,940     45.5      1,79,332          55.5

(Source: Report of Standing Committee on Defence and DSE) (Rs. In Crores)


The Indian Army has always been manpower intensive and the  authorized strength has been in the range of 12 lakhs for a long time. If we compare the figures for last five years; the authorised strength in 2014 was 11,98,037 (officers 47,574 Other Ranks  11,50,463)  and in  2019  it was 12,73,693 ( 50,312 officers and 12,23,381 Other Ranks).However, what must not be lost sight of, is  the recurrent problem of  shortage of personnel  in  the army, which means that  the held strength is always lower than the authorized strength. As per statement of the Defence Minister to Parliament, there were 45,000 vacancies as on 1 Jan 2019.

 If we view the trend in the  allocation on pay and allowances as a percentage of revenue allocation to the army, over  a time span of two decades, then it is seen that the share of Pay and Allowances which was about   50% in 1992-93  increased to 64% in 2011-12. In the current financial year 2020-21 expenditure on pay and allowances is 63% of revenue budget. The pay package of Armed Forces personnel however cannot be compared to civilians in view of their service conditions. The  picture is more complex and successive Pay Commissions have not disputed  the grant of  Military Service Pay and  allowances linked to   the hardship to compensate the military personnel. The soldier deployed in the inhospitable terrain of the Northern borders  has to face  harsh climactic  conditions apart from the enemy action on the one hand and terrorists and insurgency in addition To keep the troops deployed in these remote  areas  combat ready,  they  are regularly  rotated from the forward posts, for which  adequate reserves have to be maintained. The units deployed at the LAC also have a periodic turnover to avoid mental fatigue, permanent physical disabilities and enable the soldiers to  return to their families as essential ‘rest and rehabilitation’ requirement. Therefore, downsizing of the army, especially the combat arms has  to factor in these ground realities. At the same time there is need to bring in some organisational change in current practices like inhouse repair and maintenance echelons to  outsourcing.  For logistics, leasing of transport on  long term  contracts,  will bring savings in manpower and capital cost.

 Weapons and Equipment

The allocations for manpower have been at the cost of  the allocation for operations, maintenance and capital expenditure. It may be noted that the pay and allowances are a committed expenditure where as the allocations for stores, works etc are subject to budget allocations. Hence, if the allocations itself are less than naturally the pay and allowances component will show a higher allocation. Nevertheless, the army has been almost spartan in its approach to equip its troops even with basic weapon – the assault rifle – wherein most of the Army is only equipped with the antique OFB produced INSAS assault rifle

Despite operating in an active border,  when hand held imagers  were inducted so that troops are not night blind, it was done in a phased manner. Moreover, the units which were provided the equipment  were authorised  only one imager per platoon. The initial procurement of T-90 tanks was done without the air-conditioning to save costs. The climate control  equipment was acquired later, not for the comfort of the troops, but only when the sophisticated electronic equipment started malfunctioning.  These moves may have saved costs but in the long run may have cost lives and additional expenditure being piece meal procurements.

In a deposition to the Parliamentary  Committee on Demand  for Grants  the  Army  brought out that any modern Armed Forces should have one-third of its equipment in the vintage category, one-third in the current category and one-third in the state-of-the-art category. However, in the Indian Army,  68 per cent of the equipment is in the vintage category,  about 24 per cent in the current, and 8 per cent in the state-of-the-art category. With more than half of the equipment in the vintage category, for how long can the army rely only on the grit and bravery of its soldiers?

Piecemeal procurements and the flurry of emergency procurements at the time of crisis are not the solution, rather it means buying at much higher costs.  Given the size of the army it should be leveraged and  at least two sources of supply should be established on  long term basis, to ensure an assured supply line as well as cost competitiveness. Ordnance Factories should not function like a monopoly on protected  prices but should also compete for orders. E Procurement for regular use stores will bring in efficiency and cost advantage. Use of the GeM portal for meeting its mundane requirements must be encouraged.

Simultaneously,  the Capital budget needs to be maintained at a reasonable level. Both together require a higher allocation to national defence. Given the delicate security situation on our northern borders against a much larger and highly advanced technology driven force the defence budget requires to be restored to 2.25% of the GDP and at least 17% of the CGE.  However, these additional allocations need to be intelligently utilised so that the core purpose of modernisation is achieved in an organised manner. Further, given the situation on ground urgent fast track procurement of force multipliers such as UAVs, Electro-Optics and modern small arms needs to be fully supported. Much of these equipment can be easily sourced from Indian Manufacturers on competitive prices in line with the call for AtmaNirbhar Raksha Utpadan.

Further, the new provision of leasing should be fully leveraged to achieve force modernisation and overcome obsolescence challenges ta lower costs. This may include lease of helicopters to cover the period until the Ka-226 takes flight, various earthmoving, material handing and engineering equipment, space-based surveillance assets etc.

(The author retired as Secretary Defence Finance, Ministry of Defence, Government of India and Founder Society for Aerospace Defence and Maritime Studies, New Delhi).