Amongst India’s ministries, defence, finance, home and external affairs occupy a particularly special place. They are housed in the imperial and imposing North and South Blocks – finance and home in the North and defence and external affairs, along with the all-powerful PMO, in the South.
The state of these ministries – in particular defence – are an indicator of how well the nation is being served and consequently exude the state of India’s overall wellness.
Sadly, of the 38 months that the present government has been in power, it has been without a full-time raksha mantri (defence minister) for close to ten months – more than 25% of its tenancy. Surreal, but that’s how it has been. The government started its innings without a full-time defence minister in May 2014. The finance minister at the time held the additional charge for the first five-and-a-half months, and now continues to hold charge for more than four months since March. The clock keeps ticking and is likely to tick some more.
Changing face of Indian defence establishment
This is rather unfortunate. The Ministry of Defence (MoD) is among the larger ministries of the Indian government, both in terms of manpower and budgetary outlay. Historically, it goes back to the military department of the East India Company at Kolkata created in 1776. Through the Charter Act of 1833 to the unification of Bengal, Bombay and Madras presidencies in 1895, to creation of two separate departments (army department and military supply department) in 1906 and to the subsequent merging of the two into one army department in 1909, the face of the Indian defence establishment has changed over time.
The army department was rechristened as the defence department in 1938 and became the MoD in August 1947, with each service placed under its own commander-in-chief, topped by a cabinet minister. Sardar Baldev Singh was the first defence minister of independent India. The government of India is responsible for ensuring the defence of India through the cabinet. The defence minister heads the defence ministry; and the president is the supreme commander of the armed forces.
This is one ministry that is truly gargantuan in size, literally and metaphorically sprawled across the country’s territorial soil, air and water. It is responsible for framing government policy on defence and security issues for effective implementation of these programmes by the services headquarters, inter-service organisations, production units and defence research within the allocated budgetary outlay.
Scope of defence ministry
The sheer range of responsibility can be appreciated from the fact that the integrated defence staff, the three services (of more than 1.5 million strong) and various inter-service organisations, the defence budget (FY 2017-18: Rs 3.6 lakh crore), establishment matters, defence policy, defence co-operation with foreign countries, defence production activities of ordnance factories and defence PSUs come within the ministry’s mandate, as do issues of welfare, resettlement and pension of ex-servicemen.
While the range of activities, impressive in its reach and spread is one thing, so too are its personnel. The civilian bureaucracy and the services headquarters (with their panoply of commanders, in the level of secretary) make this ministry singularly top-heavy.
Not just that. Truth be said, there is an unspoken but palpable undercurrent of difference in approach and perception between the civil and defence bureaucracy. Often the dialectics are resolved by the political master. These two, naturally, meet courtesy the raksha mantri.
There are many such areas in this brick-and-mortar ministry where the raksha mantri remains the lynchpin of all governmental actions and activities.
Ministry’s fund requirement
On budget, setting aside committed expenditure on salary, pension and maintenance of the forces and of the support departments/organisations, what essentially remains is the modernisation budget – the current fiscal year outlay of Rs 86,488 crore rupees. This is the area of high visibility, and loud debates, within the ministry and without. How futile and atmospheric the issue of outlay is can be gauged from a simple example of a roll-on plan.
The parliamentary standing committees have over the years, beginning April 2003, been impressing upon the defence ministry to set up a non-lapsable defence modernisation fund or a roll-on plan to take care of the inevitable fund lapse on capital acquisition at the end of every fiscal. Even the finance minister in the interim budget speech of 2004-05 went ahead and announced creation of the non-lapsable defence modernisation fund with a corpus of Rs 25,000 crore. Someone seemed to have wisened up and gotten real thereafter and the general budget of 2004-05 carried no provision for the same. Yet, committee after committee, year after year, has persisted to buzz with this bee in its bonnet. Last year in April 2016, when the parliamentary standing committee got too insanely persistent for inadequate funds on modernisation, I could hold myself no further. I explained that notwithstanding the general impression of paucity of funds available for modernisation, the truth is just the contrary: the MoD isn’t in a position to spend the funds allocated.
The revised estimate for 2015-16 had been reduced in the wake of non-materialisation of contract for Rafale aircrafts. This frankly wasn’t a new trend but the reality – the way it had panned out over the past many years. So where was the need to create a non-lapsable modernisation fund keeping a certain quantum of funds aside, especially when we resort to deficit budgeting and borrow some more at a far too higher rate to keep the roll-on plan going? But no, they persisted: the fund must be in place. I remember getting back and exasperatingly briefing former defence minister Manohar Parrikar about the whole raft of logic adduced to persevere with the idea. He smiled, exhaled a snort of laughter and said he rather expatiate on capital acquisition in the parliament. And he did in great detail the nuts and bolts and nuances of defence capital acquisition.
Interestingly – and this hasn’t been highlighted in the media for lack of appreciation for what it entails – shortly before Parrikar resigned and moved back to Goa, the financial powers of the raksha mantri were enhanced in February from Rs 500 crore to Rs 2000 crore for services capital annual acquisition plan proposals, and corresponding raise in the financial power of the finance minister from Rs 1,000 crore to Rs 3,000 crore. Contracts above Rs 3,000 crore are to be approved by the Cabinet Committee on Security (CCS). On a personal note, I must confess I was stupefied that the proposal was agreed to by the ministry of finance before seeking cabinet approval when under the extant delegation more than 88% of cases of capital acquisition were within the MoD’s delegated power.
The reality is processing of cases in finance ministry had not only instilled greater diligence and discipline but also benefited the MoD in every which way of procurement. In my vision, I saw apparitions of the exacting standards diluted in seeking exemption from the purview of the Ministry of Finance (MoF) for such huge sums up to Rs 2000 crore on individual cases – more than the entire budget of most civil ministries.
The ministry of defence had always been rooting for higher powers on capital procurement – power that is untrammelled, and without scrutiny and due diligence of any external body like the MoF or the CCS. The rationale and refrain for such a dispensation was the due diligence exercised by MoD (finance), headed by a secretary-level financial advisor, as part of the integrated financial adviser system.
Acquisition proposals are but based on future cash liabilities, much beyond the current fiscal year’s sanctioned budget and often going into many future years. To suggest architecture without examination of an independent body as the MoF on financial issues or on the likely budgetary support is hard to commend. In the space department, while the Space Commission includes cabinet secretary, principal secretary to the prime minister and the expenditure secretary amongst others as members of the commission, it does not approve cases of capital nature beyond Rs 1,000 crore. Similar too in the Atomic Energy Commission, projects beyond Rs 1,000 crore are submitted to the CCS despite the member finance of the commission being a secretary-level officer like the financial adviser of defence services.
It also militates against the very basis of checks and balances that is the hallmark of an arm’s length system and is the bedrock for due diligence in cases of humongous expenditure from the consolidated fund of India, that is often fraught with the risk of abuse and the scandal of corruption. The quality and fidelity of processes ought to be the gold standard for expenditure from public funds rather than mere speed in according approval on unceasing operational demands drummed up unremittingly by the services; it may likely turn out to be worse than the disease it seeks to cure, and will be hard to reverse in future.
Again does it not also preempt cross-pollination and cross-fertilisation of ideas and approaches from other sectors and lead to inbreeding of practices/processes in MoD, which doubtless will impact on openness and transparency? In effect, the onus today is greater than ever before on the defence minister on issues of capital acquisition.
Another important concern, as onerous as the one before, is to see through the implementation of the Shekatkar committee’s recommendations that have been accepted by the government: reviewing training, administrative and logistics to optimise defence forces manpower and increase ‘teeth to tail’ ratio; suggesting “redeployment, repositioning and restructuring of manpower and resources” to improve combat capability; suggesting integration of civil infrastructure and resources into the logistic system of the defence forces in war and peace to “avoid duplication and reduce expenditure” and suggesting measures to “correct the bias of defence budget towards revenue expenditure”.
There are many suggestions that are implementable: optimal use and integration of manpower and resources by re-deploying ex-servicemen including retired officers and JCOs in various organisations; increased financial powers to all three service chiefs; restructuring and downsizing of ongoing expenditure by trimming the existing manpower and even closing down certain organisations under the MoD; a joint services war college running a one-year combined course for the three forces to impart jointness; creation of a tri-service intelligence training establishment and a four-star chief of defence staff as the chief single-point adviser to the defence minister on matters military, and generating saving of Rs 25,000 crore annually to fund modernisation.
No less significant is the strategic partnership issue – recently approved by the Union cabinet permitting domestic private companies to form joint ventures with foreign defence equipment manufacturers – on the defence minister’s table waiting to take shape and flight. If it pans out the way it is envisaged, it will open up the hugely lucrative defence industry business to Indian private sector and shoot up India’s self-reliance index in defence procurement. If carried through successfully and transparently, it’ll help whittling down MoD’s fund requirement.
But it’s a big “if” that stares MoD on its face, given that in the past, the ‘make’ and ‘buy and make (Indian)’ template hasn’t really taken off. Though the selection of strategic partnerships is initially confined to four segments – fighter aircraft, helicopters, submarines and armoured fighting vehicles/main battle tanks – it has the potential to change the grammar and syntax of Indian as well as global defence equipment industry. But it requires pigeon eyes to discern deficits, plug weaknesses and close monitoring, to ensure that the trajectory’s path lain with countless imponderables is not shambolic.
That said, it would be apt to say that the MoD is on the cusp of a paradigm shift and inevitable action. One wonders how all these important issues are to be handled without a full-time defence minister. The MoD is far too big and complex a ministry to be managed part-time as an additional charge by another minister, no matter how competent and cerebral he is.
With all due regard to the criticisms and reservations articulated by defence experts and commentators on Parrikar’s efficacy as the defence minister, it must be granted that he tried cleaning up the Augean stables and triggered many moves that have fructified or will likely fructify in the foreseeable future. Effacing a legacy of complete inaction isn’t easy, and reinvigorating the sundry cogs is truly an unenviable task.
Today, we live in difficult times: heightened militancy in Kashmir, terrorism and infiltration from across the border, the much hyped and trumped-up “surgical strikes”, accusation of human rights violation in Manipur and Jammu and Kashmir under AFSPA and “the General Dyer moment”. The services are a very proud organisation, very obsessed and finicky with their tradition and legacy that they value dearly, and wouldn’t like to forsake. Ironically, even wrong practices that hegemonised during colonial rule and should’ve been long discarded in independent India sadly continue to persist and haemorrhage. But that’s another story and for another day.
Conflict of interest
Yet, more than anything put out here, what’s troubling is that India’s finance minister is holding additional charge of defence. In effect, he who approves as administrative head accords concurrence of a higher order. For the finance minister to double up as the defence minister ex facie impugns the very concept of checks and balances, not to speak of the in-built institutional conflict of interest in according financial concurrence and according due diligence for the CCS. In fact, a 2006 finance ministry order invokes an arm’s length system in processing of cases and captures the essence of the principle of check and balance.
To wit, financial advisers will in no case be assigned any routine administrative functions of the ministry. It is pretty much an incongruity that the finance minister, whose mandate, as per the Allocation of Business Rules, is to appraise and approve plan investment/expenditure of central ministries/CPUs has been mandated to grant administrative and financial approval up to Rs 2,000 crore on capital acquisition qua defence minister, while at the same time he accords enhanced financial approval up to Rs 3000 crore qua finance minister.
And yet, 292 (167+125) out of a total of 1,148 days of the BJP government without a full-time raksha mantri – that is 25.43% of its time in power – isn’t surely what we Indians and the armed forces deserve as a nation.
Sudhansu Mohanty worked as Controller General of Defence Accounts and then as Financial Adviser, Defence Services before retiring on May 31, 2016.