Millennium Post

Riding new wave of hope

As India gives a decisive victory in favour of a strong and stable government and the new government takes a while to settle down, national defence is surely going to be among it’s high priority areas. A prerequisite for a nation’s attention on welfare of its citizens and yet a subject of little informed debate. The innumerable stories of extreme courage of our brave men in uniform have been masked by a spate of accidents, allegations of corruption in arms deals and most recently, naming of the Army chief by an outgoing government. While the decision would continue to be a source of discussion for some time, here are some serious issues for the new government to consider.

India is perhaps the only major defence spending country whose national defence is not governed by nation’s development agenda. An outlay of 11-12 per cent of central government spending, the largest after interest payments and subsidies, much is decided in isolation for defence. The outstanding opportunities for industrial development, job creation, superb spin offs for civilian applications and its ability to drive economic growth, are being dwindled due to sectoral approach towards development. First priority for the new government while reviewing defence should thus be to tie up nation’s defence to the larger development agenda and see how it could drive growth.
Second, take a holistic view of national security. A complex network of intelligence foreign policy, threat and risk assessment needs to determine the national defence policy, a clear articulation of which is long awaited. Wars in the cyberspace and social media are as much a reality as the low intensity conflict and the scenarios of the full scale war for which India has been equipping itself. 
Once its defence policy has been defined, we need to identify gaps in our capability and formulate a plan to bridge the gaps duly conducting operational and cost analysis keeping in view the resources which can be assured over medium term. This capability development plan must not be just an amalgamation of the plans of the three services as done hitherto but based on an inter se prioritisation among services and an economic evaluation of alternatives.

Much of the reform over the last decade has centered on procurement system as that has been seen as the major culprit for all of armed forces troubles. Although a hierarchical acquisition structure has been established and procurement procedures have been streamlined and refined, allegations of corruption in defence deals continue unabated while the delays in acquisition process have deprived the Indian Army of its artillery gun for over a decade, resulted in ammunition hollowness, affected the underwater capability of the Indian Navy and necessitated Indian Air Force to continue with its aging fleet. 

Each disclosure or allegation of corruption in defence deal which raised red flags, led to further tightening of procedures and made officials risk averse, less creative not wanting to be seen as currying favours. The mantra has become ‘follow the procedure’ irrespective of the outcome- irrespective of costs, irrespective of time it takes and opportunity cost it entails.  Ironically demand for greater transparency in utilisation of public funds has led to processes becoming long winding and a culture of risk avoidance and delays in materialisation of weapon systems and equipment. Our system of checks and balances which has resulted in structured , hierarchical, formal decision making has on one hand led to diffused accountability and discouraged any form of creativity and innovation even among the most well-meaning honest decision makers particularly those dealing with high value ‘sensitive’ procurements, on the other. Our oversight agencies – the Central Vigilance Commission and the Comptroller and Auditor General also need to take some share of blame. They put transactions under the scanner seeking whether procedure was followed and seeking explanations for any aberrations.  

Thus the next vital step therefore for Indian defence would be to establish an outcome focused procurement and decision making system. We need to define outcomes desired out of national defence against which performance can be assessed.  Each business entity under the Ministry of Defence and Armed Forces is clearly tasked with the objective they are required to achieve and empowered to carry out tasks leading upto meeting the objectives set for them. Decentralisation efforts have had limited success due to excessive focus on compliance of procedures, lack of accountability framework and measurement of outcomes. Let’s turn a compliance oriented system into an outcome focused system which requires flexibility and responsiveness, hallmarks of defence procurement systems of major defence spenders around the world. Let’s root our decision making in ‘principles’ rather than ‘procedures’. As long as decisions are taken to meet policy objectives exercising sound business judgement are based on professional analysis with integrity and fairness, decision makers should be allowed flexibility in their functioning to achieve intended results and must not be spared if found guilty of wrong doing. To truly get the bang for our military buck, we need to correct fiscal resource management regime where Defence, being a non-plan sector is not assured resources beyond a year and there is no framework which assures resources likely to be available over medium term; strange, as any significant defence program has a life span of 15-20 years. The input budgeting system (bequeathed to us by the British and dumped by them about half a century ago) needs to make way for programme budgeting and assured fiscal resource system to take up capability building systematically. Next, we need to give up the procurement centric view of management of defence resources. It is time we considered manpower optimisation in our armed forces- our manning policies, teeth to tail ratio, age profile of the men and women in the armed forces as also investment in their capacity building to fight the wars in the twenty first century.
India has a dubious distinction of being the largest importer of arms despite having a sound defence research base in DRDO which contributes over Rupees one hundred fifty thousand crores of indigenous value of production. Despite an eager industry, much of the defence production rests with state owned undertakings and ordnance factories which continue to grapple with issues of capacity, quality and efficiency. If we truly wish for India to be self-reliant in defence technologies, we need imaginative policies to make industry participation, a viable business proposition. Early identification of production partners and staying with them using consortium approach through development and production phase for delivery of systems including considering option of export potential will enable industry scale up and help quicker absorption of homegrown technologies.

Finally let’s learn from Korea and Brazil which have used innovative policy framework and offsets to assimilate learnings from foreign vendors and have developed significant capability and have eventually turned exporters. China’s single minded determination and diligent reverse engineering has helped transform them from a producer of low quality, low technology cheap goods to an exporter of high technology goods. To meet the 21st century security challenges, India must give up its 18th century mindset and 19th century tools! To build a credible and affordable defence while keeping spending at sustainable levels, the new government must swiftly turn its attention to defence and give it much needed leadership. The quick wins will come from putting in place, a performance measurement framework, simplifying processes and building trust.

The author is the Integrated Financial Adviser at DRDO
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