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13th Five-Year Defence Plan (2017-22) – A Re-Run of the Past

Mr Amit Cowshish is a former Financial Advisor (Acquisition), Ministry of Defence and former Distinguished Fellow, Manohar Parrikar Institute for Defence Studies and Analyses, New Delhi. Click here for Detailed Profile
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  • July 31, 2017

    The 13th five-year defence plan (2017-22) envisages an allocation of Rs 26,83,924 crore for the armed forces.1 This includes Rs 13,95,271 crore under the revenue segment and the remainder for defraying the capital expenditure. Given the secrecy surrounding the plans, it is unlikely that much will be known about the outcomes intended to be achieved.

    Although other stakeholders were apparently consulted while preparing the plan, in all probability this projection does not include the requirements of the Defence Research & Development Organisation, Ordnance Factories, Coast Guard, Border Roads Organisation, and many other organisations as well as activities carried out under the administrative control of the Ministry of Defence (MoD). It certainly does not include the money required for defence pensions.

    The total allocation for these aforesaid organisations, activities and defence pensions adds up to Rs 1,36,746.10 crore for the year 2017-18, with defence pensions alone accounting for Rs 85,737.31 crore. Without factoring in any increase in the coming years, the requirement on this count for the plan period will work out to Rs 6,83,730.50 crore.

    Assuming that the requirement has been worked out based on immaculate costing and there will be no cost overruns or additional requirements, the total requirement of the armed forces, other organisations and defence pensions would thus add up to Rs 33,67,654.50 crore.

    Since the current financial year happens to be the first year of the 13th five-year plan and a total sum of Rs 3,59,851.43 crore already stands allocated for the current year, a sum of Rs 29,07,803.07 crore will be required for the remaining four years at an annual average of Rs 7,26,950.76 crore. This figure may undergo some minor change if additional sums are allocated, or the allocation reduced, at the Revised Estimate (RE) stage.

    Achieving the intended outcomes of the plan, therefore, is critically dependent on the ability of the Ministry of Finance (MoF) to increase the budget by at least 100 per cent from next year onward, pushing it to around three per cent of the Gross Domestic Product (GDP). This is considered by many to be an ideal level of funding. It is, therefore, possible that the plan is actually based on the assumption that allocations totalling three per cent of the GDP will be made available for defence during the 13th defence plan period.

    It is not known whether the MoF was asked about the possible level of funding before commencing the planning process. In any case, meeting the projected requirement will require the MoF to revisit its Midterm Fiscal Policy of 2016-17, which estimated the defence expenditure, including its capital component, to be about 1.6 per cent of GDP in both 2017-18 and 2018-19.2 It will also have to make serious efforts to raise more revenue in the coming years to be able to meet the requirement.

    From now on, the discourse on the 13th defence plan will follow a familiar course. To begin with, there is bound to be clamour for an early ‘approval’ of the plan. Though there is no procedural or statutory requirement of seeking the approval of any authority outside the MoD, the expectation will be that the plan will be brought before the Cabinet Committee on Security (CCS) for immediate approval.

    For the record, only three of the 12 five-year plans so far have been approved by a cabinet committee. The sixth and seventh plans for the periods 1980-85 and 1985-90 were approved by the Cabinet Committee on Political Affairs (CCPA), and the ninth plan for the period 1997-2002 was approved by the Cabinet Committee on Security (CCS).

    Stung by protracted deliberations with the MoF on the size of the 11th defence plan which led nowhere and forced it to abandon the idea of seeking CCS approval, the MoD decided to let matters rest after the 12th five year plan was approved by the Defence Acquisition Council (DAC) within the ministry on April 2, 2012.

    But the view that defence plans must be approved by the CCS continues to find strong support in the public discourse, although hardly any information is available on the impact of such approvals on the achievement of the intended outcomes of the plans in the past or, conversely, the impact of non-approval on defence preparedness. The general view is that CCS approval would make it binding on the government to make the projected funds available for spending during the plan period.

    The clamour for seeking CCS approval, with strong prodding from Parliament’s Standing Committee on Defence (SCoD), may force the MoD to abandon the precedent set in 2012 and actually seek CCS approval. This will lead to the re-emergence of the problem which had led the MoD in the first place to abandon the idea of seeking CCS approval for the 11th plan and instead deciding to approve it within the ministry.

    According to the laid down procedure, MoD will need to first consult the MoF on putting up the 13th defence plan for CCS approval. The expectation implicit in this process is that the government will ‘commit’ itself to the projected level of funding, irrespective of any other developments which may have a bearing on its ability to generate additional revenues to meet the commitment. While nothing is impossible, this seems improbable and, consequently, so does the possibility of obtaining CCS approval any time soon, causing disappointment all around.

    This might also lead to some feeble questioning of the utility of basing five year or other plans on unrealistic assumptions about how much money is likely to be available for achieving the desired objectives. It does not help either that the plans are not overarching in so far as they do not encompass other organisations which must necessarily play a complementary or supplementary role in achieving the overall objectives.

    Defence planning was synchronised with national plans only in 1980 when the sixth defence plan for the period 1980-85 was made coterminous with the sixth national plan covering the same period. It is not clear what purpose was served by this, as there has never been any direct linkage between the two.

    While there is no question that planning is an important facet of defence management, the question whether objectives can be achieved only be persisting with the concept of five-year defence plans as a part of the three-tiered structure of defence planning is moot. The entire gamut of defence planning needs to be revisited against the backdrop of the dismantling of the national five-year centralised planning regime and the Niti Aayog – successor of the Planning Commission – vowing to venture into defence. There is no indication that the proposed 13th defence plan takes into account the Niti Aayog’s vision for defence.

    A financially pragmatic and outcome oriented plan covering a compressed time span has a better chance of showing results in the short run and setting the stage for a long haul towards achieving the highest level of defence preparedness. It is time that financial viability, including the ways and means of augmenting financial resources, is recognised as an inalienable factor in planning, however abhorrent that idea may be.

    Views expressed are of the author and do not necessarily reflect the views of the IDSA or of the Government of India.