A fund crunch always hits hard but when it comes to the second largest army in the world that

is in the midst of one its biggest-ever expansions and placed in a hostile neighbourhood, things
can take a serious turn. The Indian Army is stretched too thin-wartime reserves are at a low, and
in tune with a general reduction in spending by the government due to low revenue generation,
its meagre modernisation budget too has been substantially cut this year.
However, the situation is not entirely new-year after year, especially during UPA II, the land
force was perceived to be getting a raw deal at the expense of a thrust to the air force. Things,
however, are at a precarious edge now with the army progressively adding 88,000 new troops to
its ranks to build a mountain strike corps to boost its defence on the China border, without a
commensurate increase in budgetary allocation.
The fear is that the army may be in a tough spot-beefed up in numbers but poorly equipped as
modernisation plans have remained frozen. At the very core is the manner in which new
battalions and units have been raised over the past few years. In order to meet timelines, all
raisings of the new mountain strike corps have been done by cannibalising existing units, taking
apart ammunition, arms and supporting infrastructure such as vehicles and bulletproof jackets
that are reserved for use in times of war. Put in technical terms, the army has over the past four
years dipped into its war wastage reserve (WWR) to support new battalions along the China
border.
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While this practice in itself is not new-traditionally new raisings have been carried out in a
similar manner-the problem is that the army has not been getting replenishments and its budget
allocation has remained almost static, barely matching up to inflation rates. The addition of
88,000 troops is technically coming without a proportional increase in arms, infrastructure or
ammunition holdings.
Frustrated by repeatedly making its case for much-needed funds for the new raisings with the
previous government, the army HQ has now made a new roadmap and a call for attention with
the new dispensation (see box). The grouse is simple. The UPA notionally allotted Rs 5,000 crore
for setting up new corps. However, this allotment was adjusted from within the existing budget
of the army. Army HQ has now requested a one-time, special infusion of funds (Rs 5,000 crore)
to make up for deficiencies, which the Narendra Modi-led government is considering. A list of
seven priority areas for modernisation has also been drawn up by the army. These priorities
include procurement of new artillery guns (not a single new gun has been purchased in almost
three decades), induction of light choppers for the aviation corps, upgradation of tanks and
armoured carriers with night vision device and procurement of a new assault rifle for soldiers.
"We have put our views across for a special allocation and it seems that it will be accepted," a top
Lt-Gen involved in the modernisation process told India Today.

Senior defence analyst Brigadier (retd) Gurmeet Kanwal says that depletion of war reserves will
undoubtedly hit preparedness. "Ideally, ammunition for new raisings should be bought fresh but
since that has not happened, reserves that are earmarked for war have been depleted. This is
bound to dent the overall combat capability of the force due to the stretching involved in new
raisings," he says.
While there has been little debate on the expansion of
the world's second largest standing army at a time
when all major powers, including China a nd the US,
are downsizing, army HQ feels that the new mountain
strike corps is central to its defences on the Eastern
border.
In a session with members of the parliamentary
standing committee on defence in September last year, Vice Chief of Army Staff, Lt-Gen Philip
Campose, was forthcoming on the need for augmenting force levels. "Our analysis of the threat
perception after 15 years predicted that the way it (China) has been getting more aggressive in
resolving its disputes with neighbours, especially, in view of what we have seen with its
maritime disputes in the South China Sea, it was our attempt to make sure that we are fully
prepared to deal with this threat if at any time (China) decides to raise the ante and get more
aggressive," Lt-Gen Campose said. In the same session, however, the Vice Chief admitted that to
meet the "fast time frame", the army used up some of its reserves.
This additional "burden" on the resources of the army comes as a big blow as far as financial
planning is concerned, given that its revenue to capital budget ratio is seriously lopsided. From
its annual allocation of funds , the Army barely got 22 per cent this year for capital expenditure
-to buy new arms and equipment for its soldiers. Even this allocation of Rs 20,900 crore this year
has now been further cut down by Rs 4,500 crore (over 20 per cent) as the government struggles
to meet its expenses.
Even within the 78 per cent block of money that goes into the revenue head, pays and allowances
of the officers and staff eat up a major part of it, leaving spending on ammunition the only place
where a cut is possible in case the allocation is not sufficient. "More than 60 per cent of the
revenue allocation of the army is consumed in pay and allowances. The amount left is inadequate
for meeting the requirement under other budget heads such as the expenditure on clothing, ration
and fuel. Consequently, the burden of inadequate allocation gets passed on to the areas where
paucity of funds would not trigger any immediate crisis-procurement of ammunition being one
such area," Amit Cowshish, former financial adviser (acquisition), Ministry of Defence,
mentioned in a paper for the Institute for Defence Studies and Analyses.
A lopsided budget means that the army has little left to invest in new technology. To correct
this, the army has suggested that the government consider shoring up the nation's spending on
defence from the current all-time low of 1.7 per cent of the GDP. In a presentation to Indian
lawmakers, the army has projected a gradual increase in defence spending to 3 per cent. This will
not only cater to the major modernisation deficiencies in the system but will also be on a par with

the spending done by most other major nations. "To fight a war on two fronts, an allocation of at
least 2.5 per cent is needed," says Kanwal.
The government's test on delivering for the army will come very soon as it makes allocations for
defence spending in the next financial year. The army remains positive that at least the start of a
course correction will be visible in this year's budget.
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