Home > Money > Budget 2001 > Budget Analysis Banner Ads
Channels: Astrology | Broadband | Contests | E-cards | Money | Movies | Romance | Search | Weather | Wedding | Women
Partner Channels: Auctions | Auto | Bill Pay | Jobs | Lifestyle | Technology | Travel
March 1, 2001                                       Feedback  

    - EXIM POLICY '00



    - BUDGET 00-01
    - BUDGET 99-00
    - BUDGET 98-99
    - BUDGET 97-98


Information you can use

   The Best Budget Sites
   Ministry of Finance
   Budget 2000
   Reserve Bank of India


Banner Ads
Banner Ads
Banner Ads
Banner Ads
 Search the Internet
 Sites: Finance, Investment
E-Mail this assessment to a friend
Print this page

'The armed forces are an insurance policy'

General V P Malik (retd)

This Budget is not as good as the armed forces would have liked it to be. But I do not think that it will have any major impact on our essential modernisation requirements.

After a calamitous additional financial burden on the central government on account of the Gujarat earthquake, less than expected economic growth during the year and mounting pressure to reduce the overall government expenditure, I did not expect the finance minister to be as kind with defence allocation for the year 2001-2002 as he was in the year 2000-2001. You will recall that there was an increase of about 28 per cent in defence allocation last year.

I would like to inform everyone that India's defence expenditure is in line with global and regional expenditure on defence. And it is less than the percentage of GDP spent by Pakistan and China. Obviously we are spending much less on security than most other countries of our size, given the challenges we face.

Of course, we shall never have adequate money for our total needs, and therefore, correct prioritisation is essential.

I do not agree with the statement that the defences forces are a holy cow that cannot be touched. The armed forces are an insurance policy. You have to pay to be able to get adequate security for the nation.

For the next five years or so, we should have about 3.5 per cent of the GDP allocated to defence requirements.

Overall, I rate the Budget as a satisfactory one. The 13.8 per cent increase in defence allocation after covering the current rate of inflation will leave about five per cent extra. But it will not meet the usual escalation of 20 to 30 per cent per year in the cost of weapons and equipment. Some modernisation programmes will therefore get slowed down.

However, important modernisation programmes like T-90 tanks, force multipliers, surveillance devices, light infantry weapons and equipment, 155 mm artillery guns, AJTs and naval upgradation may not be adversely affected.

So far we have not struck any deal for the aircraft carrier, Admiral Gorshkov. We do not have to pay the whole amount in one go for tanks and aircraft. The cash outgo will depend upon the deliveries. I believe that the 13.8 per cent increase in the budget would be good enough for this.

We are spending about 5.5 per cent of the defence budget on R&D. However, there have been some delays in the development of weapons and equipment, and therefore we have to import equipment like the T-90 tanks. Before every purchase a proper analysis is carried out, whether to develop and manufacture the equipment in India or to buy it from abroad.

There is no doubt financial management in the defence sector can be improved further. There are suggestions regarding roll-on plans or having a defence reserve fund so that the allocation for new weapons and systems can be carried forward in the event of either the deal or the delivery getting delayed. I am sure the government will look into this. I have a lot of hope on the implementation of the recommendations by the Group of Ministers on integration and restructuring the security apparatus.

There is no proposal of doing away with civilian officials in the ministry of defence. The CDS, if and when appointed, will have to work along side his civilian colleagues including the defence secretary. Like in all other democratic countries, the CDS -- Chief of Joint Staff in USA -- becomes the chief coordinator and single point advisor to the government. His appointment will help in integrating the financial and operational requirement of the three services. I believe it will make our system operationally and financially more cost effective.

Ours is a volunteer army. So we have to motivate and attract young people to join the Army. People who are fond of outdoor life, adventure, high integrity and believe in camaraderie. The pay packet is enough, though not as much as the multinationals can pay. Basically, you must have it in you if you want to join the Army. The situation is already improving.

General V P Malik (retd) is a former army chief

Budget 2001

Tell us what you think of this Analysis