{"id":116089,"date":"2021-07-03T10:38:53","date_gmt":"2021-07-03T05:08:53","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=116089"},"modified":"2021-07-03T10:38:53","modified_gmt":"2021-07-03T05:08:53","slug":"military-should-fund-its-own-modernisation","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/military-should-fund-its-own-modernisation\/","title":{"rendered":"Military should fund its own modernisation"},"content":{"rendered":"\n<p><b>Source<\/b><span style=\"font-weight: 400;\">: <a href=\"https:\/\/www.business-standard.com\/article\/opinion\/military-should-fund-its-own-modernisation-121070101541_1.html\" target=\"_blank\" rel=\"noopener\">Business Standard <\/a><\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><strong>Relevance:<\/strong> The issue justifies a case of modernization of the military by itself.<\/p>\n<p><b>Synopsis<\/b><span style=\"font-weight: 400;\">:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The threat of a two-front war creates an urgent situation to modernize the military which requires enhancement of the defence budget. The additional revenue can be generated by levying a military modernization cess, leasing military lands, or disinvesting some ordnance factories.<\/span><\/p>\n<p><b>Background<\/b><span style=\"font-weight: 400;\">:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The intrusion of Chinese soldiers across the Line of Actual Control (LAC) in 2020 brought the Indian military inched closer to its worst-case security contingency. It was on the verge of a <\/span><b>two-front confrontation with both China and Pakistan.<\/b><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">There is a situation of peace after the renewal of the ceasefire agreement on the India-Pakistan Line of Control. Further, the PLA is also quiet after largely achieving its operational objectives in Ladakh.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Nonetheless, the threat of a two-front war is still looming, which creates an urgency to modernize the military. However, this can be done only with an enhanced defense budget.<\/span><\/li>\n<\/ul>\n<h5><b>Pattern in the allocation of defense budget:<\/b><\/h5>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">There is a <\/span><b>dire shortfall of funds for capital purchases<\/b><span style=\"font-weight: 400;\">. The government has been allocating fewer resources for capital expenditure than demanded by the military since 1992.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Each year, the military calculates its Capex requirements for the coming year and projects its requirement to the Ministry of Defence (MoD).\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The MoD projects this onwards to the Ministry of Finance (MoF). Then, without assigning reasons, the MoF slashes the military\u2019s requirement and allocates a smaller capital budget instead.<\/span>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The current defence budget was presented in the backdrop of an ongoing conflict between Indian troops and the PLA in Ladakh.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The MoF still slashed the military\u2019s Capex projection of Rs 199,553 crore by a whopping 38 percent (Rs 76,553 crore), allocating just Rs 123,000 crore.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h5><b>Why is there a cut on defence expenditure every year?<\/b><\/h5>\n<ul>\n<li><b>First, <\/b><span style=\"font-weight: 400;\">governments have operated on<\/span><b> the assumption that a full-scale war was highly unlikely<\/b><span style=\"font-weight: 400;\"> and, therefore, equipment modernization was wasteful.\u00a0<\/span><\/li>\n<li><b>Second<\/b><span style=\"font-weight: 400;\">, <\/span><b>Border conflicts,<\/b><span style=\"font-weight: 400;\"> such as the 1999 Kargil war, the 2017 Doklam confrontation, and the ongoing Ladakh intrusions <\/span><b>are not serious enough to make equipment modernization an imperative<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span>\n<ul>\n<li><span style=\"font-weight: 400;\">If things go wrong, such as in Kargil where the army was caught without 155-millimeter artillery ammunition for its Bofors guns,<\/span><b> we rely on friends like Israel to bail us out.\u00a0<\/b><\/li>\n<\/ul>\n<\/li>\n<li><b>Third, <\/b><span style=\"font-weight: 400;\">the<\/span><b> political-electoral calculus favors <\/b><span style=\"font-weight: 400;\">the spending of thousands of crores on vanity projects such as Sardar Vallabhbhai Patel\u2019s statue in Gujarat and the redevelopment of the Central Vista in New Delhi.\u00a0<\/span><\/li>\n<\/ul>\n<h5><b>Need to increase defense expenditure<\/b><span style=\"font-weight: 400;\">:<\/span><\/h5>\n<ul>\n<li style=\"font-weight: 400;\"><b>First<\/b><span style=\"font-weight: 400;\">, the revenue heads, which include salaries, pensions, and the forces\u2019 operating expenses, are already catered for before allocating money to the capital budget head.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Therefore, <\/span><b>any increase in the defence budget would be an increase in the capital budget<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\"><b>Second<\/b><span style=\"font-weight: 400;\">, making a capital purchase usually requires only 10-15 percent of the total cost to be paid up-front. The remaining amount is disbursed over a five to seven-year period, as the product is manufactured and delivered.<\/span>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Therefore, the army, navy, and air force can fill critical deficiencies of fighter aircraft, artillery guns, and submarines with just 1\/10th of the total amount.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h5><b>Ways to generate revenue for incurring greater expenditure<\/b><span style=\"font-weight: 400;\">:<\/span><\/h5>\n<ul>\n<li style=\"font-weight: 400;\"><b>First<\/b><span style=\"font-weight: 400;\">,\u00a0 Goods and services tax (GST) could be increased by 1 percent in all slabs as a <\/span><b>military modernization cess<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Further, much of the education cess on income tax remains unutilised. It can be reduced by a percentage point and a 2 percent cess for military modernization could be levied.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\"><b>Second<\/b><span style=\"font-weight: 400;\">, if increasing taxation is unacceptable, the defence services could <\/span><b>monetise <\/b><span style=\"font-weight: 400;\">some of its 17 lakh acres (2,833 square kilometres) of <\/span><b>defence land<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">However, real estate has created a chequered history of controversies involving senior generals. Such as scandal in Sukhna in 2008 and the Adarsh Housing Society scam in Mumbai in 2011.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\"><b>Lastly, <\/b><span style=\"font-weight: 400;\">\u00a0MoD can do <\/span><b>disinvestment in the 41 factories<\/b><span style=\"font-weight: 400;\"> of the Ordnance Factory Board (OFB). The factories produce arms, ammunition, and equipment for the military worth about Rs 12,000 crore annually.<\/span>\n<ul>\n<li style=\"font-weight: 400;\"><b>In the UK, selective privatisation has transformed<\/b><span style=\"font-weight: 400;\"> a moribund public defence sector into vibrant and productive private entities. London has conveyed its willingness to share its experience and expertise with India.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Source: Business Standard \u00a0 Relevance: The issue justifies a case of modernization of the military by itself. Synopsis: The threat of a two-front war creates an urgent situation to modernize the military which requires enhancement of the defence budget. The additional revenue can be generated by levying a military modernization cess, leasing military lands, or&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/military-should-fund-its-own-modernisation\/\">Continue reading <span class=\"screen-reader-text\">Military should fund its own modernisation<\/span><\/a><\/p>\n","protected":false},"author":10322,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[],"class_list":["post-116089","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/116089","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10322"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=116089"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/116089\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=116089"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=116089"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=116089"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}