Budget 2016: One thing finance minister should keep in mind — Indian Navy deserves more

By Prakash Nanda

With 75,000 personnel, including 6,000 officers, the Indian Navy may be smallest among our three services, but it has perhaps the biggest responsibility in protecting and furthering India’s national interests.

A multi-dimensional, multi-spectrum and networked force, the Navy has a full range of operations, ranging from high intensity war fighting at one end to humanitarian assistance and disaster relief operations at the other.

A fast-growing power that it is, India has no choice other than actively pursuing and promoting its geopolitical, strategic and economic interests on the seas, particularly in the Indian Ocean, not to speak of protecting its 1,200 island territories and huge exclusive economic zone of 2.4 million square kilometers.

Budget 2016: One thing finance minister should keep in mind — Indian Navy deserves more


All told, 95 percent of India’s foreign trade by volume and 75 percent by value is conducted by sea; also, more than 70 percent of its oil was imported by sea. And what is more important, it is only the Navy which can provide the nation a credible minimum nuclear deterrent through its ballistic nuclear submarines (SSBN) like the INS Arihant.

In other words, along with India’s economic growth, its Navy has to grow in importance, too. At present, operational and maintenance units of IN consist of warships, aircraft carriers, submarines, dockyards, naval ship repair yards, armament and weapon equipment depots and material organisations. It has an Aviation wing with air stations and allied repair facilities under them. The Navy is also overseeing teams which monitor the construction of ships and submarines at the concerned shipyards.

Against this background, it is logical to assume that the Naval Budget will correspondingly go up every passing year. But that has not been the case. In fact, the Naval Budget as a percentage share of total Defence Budget has declined from 17.32 percent in the year 2006-07 to 15.32 percent in the year 2015-16. Every year, the Navy projects a figure, but that remains far off when the Finance Minister presents his Budget proposals to the nation through Parliament.

This despite the fact that if there is something called financial management then of all our defence establishments, it is the Navy that practices it best. It spends its funds relatively well keeping in mind a realistic wish-list. It has developed a comprehensive financial information system (FIS), facilitating effective planning, allotment, expenditure and monitoring of the Naval Budget. And most important, unlike the Army and Air Force, Indian Navy is becoming successfully indigenized every passing year, saving precious foreign exchange in buying foreign military systems and generating more employments at home.

Take, for instance, the Navy's revenue budget. In the year 2014-15, although it had projected an amount of Rs 19,570.57 crore as budgetary allocation, it was allocated an amount of Rs 13,975.79 crore, a shortfall of Rs 5,594.78 crore, i.e. nearly one-third of the projected amount.

This was the sixth year in succession that the Navy got far less than want it needed for its revenue side. And this trend is likely to continue, given the Finance Ministry’s standard reply of financial constraints.

What has been happening all these years is that the revenue allocations for the Indian Navy is mainly taking care of the salaries and associated perks of its personnel, leaving very little for meeting day-to-day requirements of Operational Deployments (including Anti-Piracy Patrols) and Coastal Security.

In addition, requirement of stores (fuel, weapons, armament, spares), victualling and rations, repairs and refits is also not being properly met. There is thus a serious need for reviewing the Navy’s Revenue allocations.

As far as the the Indian Navy's capital expenditure is concerned, which includes the modernisation and acquisition of new systems, compared with the Army and Air Force, it has been in better shape. Seen in terms of the Revenue/ Capital ratios, as against the Army’s 81:19 and Air Force’s 41:59, Navy’s was 39:61 in the 2015-16 Budget.

That means of the total budgetary allocations for the Navy, 61 percent went to the capital outlay. But then, in terms of the actual amount, it was Rs 23,910 crore, much less than Air Force’s Rs 31,481 crore.

The more important point is, as is the case with the other two services, the Navy's capital outlay is not in sync with its modernisation and acquisition plans. It does not meet the requirements as sanctioned in 2012. It may be noted that the sanctioned strength of vessels for Navy includes submarines, ships, aircraft carriers, etc. Some projects such as P 15 A and P28 ((Kolkata class stealth guided missile destroyers), Indian Aircraft Carrier (IAC), P75 and P75 (I) (submarine projects) are streamlined and under progress at various shipyards in the country. But there have been regular delays and cost overruns occurring in different projects.

In case of IAC, the original sanctioned cost was Rs 3,261 crore which has been revised to Rs 19,341 crore i.e. six times cost escalation. In case of P15A, the cost has been revised to Rs 11,662 crore from Rs 3,580 crore and dates have been revised from 2009-10 to 2015-16. Similarly, in case of aircraft carrier 'Vikramaditya', there had been huge cost escalation due to repeated time extensions. The indigenously built Vikrant IAC is also running behind the schedule.

As the Parliamentary Standing Committee on Defence has rightly noted, ‘time and cost overruns in almost all the projects is a major cause of concern. For long, the country’s defence needs have been lying unattended and huge gaps have emerged in Force Level. It’s high time that adequate budgetary support is made along with necessary operational reforms at shipyards and other construction sites.” One agrees with this observation in toto.

The author is Editor of Geopolitics, a military journal

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Updated Date: Feb 27, 2016 13:41:48 IST

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