Friday, March 6, 2015

India vs China: Defence spending and other factors

The Defence Budget for the Financial Year (FY) 2015-16, has disappointed many. Finance Minister Arun Jaitly has ‘only’ announced a raise of about 10 percent to Rs 2,46,727 crore (40 billion US dollars), which is Rs 23,357 crore more than the revised estimates for the current financial year (Rs 2,22,370 crore).
Defence experts have unanimously commented that this inadequate allocation will not provide the necessary boost for the country’s military modernization, particularly if it wants to catch up with China.
In July 2014, when he presented his FY 2014-15 budget, Jaitley had increased the defence allocation by 12.5 per cent over the 2013-14 allocation.
The current defence budget corresponds to a ‘meager’ (say defence experts) 1.74 per cent of India’s projected GDP for 2014-15.
Though Jaitley affirmed in the Parliament: “Modernisation of the armed forces is critical to enable them to play their role effectively in the defence of India’s strategic interests,” the fact remains that it is doubtful if this allocation can help India to bridge the gap with its Northern neighbour.
The revenue expenditure planned for 2014-15 amounts to 60% of the amount allocated; it covers amongst other things, salaries, allowances, rations, ammunition and transportation. The remaining 40%, amounting to Rs 94,588 crore, is earmarked to the capital account for the acquisition of new weaponry and equipment.
Brig Gurmeet Kanwal, former Director of the Centre for Land Warfare Studies wrote in The Indian Defence Review that it is not enough considering “the Army has begun the raising of 17 Corps, designated as a mountain strike corps, which is expected to cost Rs 64,000 crore over seven years. Major acquisitions of weapon platforms that have been pending for long include initial payments for 126 multi-mission, medium-range combat aircraft (MMRCA), 197 light helicopters, 145 Ultra-light Howitzers, 15 Apache attack helicopters and 22 CH-47F Chinook medium lift helicopters, C-17 heavy-lift aircraft and frigates and submarines.”
It is difficult to see how these expenditures will be met, though Jaitley believes that the ‘Make in India’ scheme could help save some precious resources; he cited the new FDI policy (49%) for the defence sector, which could trigger important changes.
A week earlier, the Prime Minister visited to Aero India 2015 in Bangalore; he had the opportunity to clarify: “India is ready to build an industry that will have room for everyone - public sector, private sector and foreign firms.”
The inclusion of private and foreign firms could be a game changer. It makes the ‘Make in India’ a realistic objective: “We want to develop an industry that is dynamic. It should constantly stay at the cutting edge of the global industry. …We must involve our scientists, soldiers, academia, industry & independent experts more closely in research and development,” said the Prime Minister.
But there is a long, long way to go. Though ‘Make in India’ was the central theme of the five-day fair, many observers questioned: ‘Can Modi make it in India?’
China has a different set of problems.
The 2015 Chinese defense budget was the focus of attention during the annual Two Meetings of the National People's Congress and the Chinese People's Political Consultative Conference which opened on March 3 and 5 respectively.
A few days before the event, the Taiwanese website WantChinaTimes quoted Jin Canrong, a professor at the School of International Studies at Renmin University of China, saying: “China's overall tax revenue dipped last year and he said that sustained double-digit growth of China's defense budget would most likely be based on its strategies for coping with any changes in its relations with the United States.” The Defence expert added: “If China increases its military budget by double-digits this year, it would signal that the country is boosting its combat preparedness in response to perceived potential challenges.”
Last year, the budget was 808.2 billion yuan (US$129 billion), an annual increase of 12.2% compared to the previous year, while the hike in 2013 was a 10.7% increase.
While the Middle Kingdom still lives in rhetoric, Beijing remains very pragmatic about its defence spending. The South China Morning Post gives a long list of the current slogans used by the Communist leadership: the Eight Regulations, Six Bans, Four Forms of Decadence (formalism, bureaucratism, hedonism and extravagance), The Synchronisation of Four Modernisations, Five in One, One Belt and One Road, etc. The defence budget is not caught in such populist sloganeering, though Xi Jinping has introduced a own theory, the 'Four Comprehensives', which promotes ‘building a moderately prosperous society, deepening reform, governing the country according to rule by law, and enforcing strict party discipline’.
Xi likes to mentions his ‘Chinese dream of the great rejuvenation of the Chinese people’; in the People's Liberation Army (PLA) too, the battle for ‘the dream’ is raging. While Beijing tries to take head-on the rampant corruption amongst the generals, Xi affirmed that the PLA’s main objective to make the troops able to ‘fight and win battles’.
A few days ago, a group of 14 officials of Major General rank were placed under investigation. The most prominent is Guo Zhenggang, former deputy political commissar of the Military Command of Zhejiang province, and son of a former CMC Vice-Chairman.
It also includes Zhu Heping, head of the Joint Logistics Department of the Chengdu Military Area Command.
The resolute fight against corruption, at all the levels of the PLA, has one ‘budgetary’ collateral as all military officials should now rely on their salaries only. If the ‘customary’ sources of income are cut, how will Xi control the generals and built a ‘Chinese Dream Army’.
Probably by increasing their salaries!
Let us not forget that a third of the military budget pays the salaries of the PLA's 2.3 million personnel.
Fu Ying, the spokeswoman for the National People's Congress spokeswoman announced during a news conference that the defence budget will ‘only’ increase by about 10% , while last year spending rose by 12.2% to $ US 130 billion, second only to the United States (US $ 581 billion).
Fu further explained: “Compared with great powers, the road of China's defence modernisation is more difficult. We have to rely on ourselves for most of our military equipment and research and development.” She added that China's defence policy is defensive in nature.
This is a relatively modest increase at a time China faces serious problems.
One of the reasons is that last year’s growth was 7.4%, the slowest in 24 years; a further slowdown to around 7% may be around the corner. It may hamper the larger defence spending.
But there is more, a report prepared by the Rand Corporation for a US congressional committee argued that China’s military is not ready to win wars despite spending heavily.
The report says: “The PLA suffers from potentially serious weaknesses that could limit its ability to conduct operations required to fight and win future conflicts. …Although the PLA’s capabilities have increased dramatically, its remaining weaknesses increase the risk of failure to successfully perform the missions the Chinese Communist Party leaders may task it to perform.”
The PLA is said to have an outdated command structure, poor quality personnel, to lack professionalism and be held back by corruption, the report added.
So, despite the shortcomings of the Indian defence budget, a stable and democratic India is perhaps not so badly off and let us not forget that China’s official budget is only the ‘disclosed’ portion of the real one.

No comments: