Balancing Priorities: Defence, Foreign Policy, And The Union Budget 2024-25

Press Release

Naushaba

IMPRI Center for International Relations and Strategic Studies, IMPRI Impact and Policy Research Institute, New Delhi, hosted a panel discussion on ‘Balancing Priorities: Defence, Foreign Policy, and the Union Budget 2024-25’ under its 5^th Annual Series of Thematic Deliberation and Analysis of Union Budget 2024-25 on 29 July 2024. This diplomatic dialogue aimed to delve into the heart of India’s security and its place on the world stage addressed under Union Budget 2024-25.

Dr Simi Mehta, CEO and Editorial Director at IMPRI, opened the discussion panel on ‘Defence, Foreign Policy & Union Budget 2024-25’ by introducing the distinguished panel to give their expertise on the topic. Dr Mehta asked the eminent panellists to give their views on the Union Budget 2024-25 effect on defence and foreign policy, implications and way forward.

The platform was open to discussion after a brief overview of allocations given to the Ministry of Defence (MOD ) and the Ministry of External Affairs (MEA). The IMPRI team presented precise data on the allocations, as per the Union Budget 2024-25, the Defence Sector was allocated Rs. 6.21 lakh cr, which was 0.01 lakh cr less than Rs. 6.22 lakh cr announced in the interim budget. However, its spending was the highest among all the ministries and accounted for 13.04 per cent of the overall budget expenditure.

If understood from the past half a decade, there was a steady increase in budget allocation from Rs. 4.71 lakh cr in 2020 to Rs. 6.21 lakh cr now. Despite such an increase in allocation, India’s military spending lags behind major powers like the US and Russia, and its rival China in absolute terms.

Prof Sanjukta Bhattacharya, a Retired Professor of International Relations at Jadavpur University, Kolkata and a Visiting Professor at IMPRI, led the discussion in a comprehensive fashion. She pointed out that the budget needs to be looked at holistically and not entirely from one perspective or theme. Although there was an increase in allocations for MoD in the Union Budget 2024-25, the MEA fell short of the revised estimates and constituted only 1.9 per cent of the GDP. This is especially true during a time when India is facing challenges in its increasingly complex neighbourhood.

Prof Bhattacharya listed the three objectives of India at the national, regional and global scale, i.e. Viksit Bharat, Aatmanirbhar Bharat and Vishwa Bandhu. This equates to India’s focus on development, self-reliance and global status which are all interlinked with each other. To come true to this agenda, there is an imminent need for India to aid more and more countries as it was the USAIDS that made the US a Vishwa Bandhu for the world. For Aatmanirbhar Bharat, the defence sector in India should focus on modernisation which will increase the rate of employment simultaneously. Cut in custom duty on imports of smartphones, gold and silvery was one of the ways forward for self-reliance.

However, India still remains an assembler of components in various areas rather than being the creator. Hence, there greater need to focus on Make in India. The focus should be on analysing how to melt the archaic with modern with the changing definition of war and the increasing presence of China. The MEA has capacity constraints because of fewer working staff and fewer diplomatic missions abroad. Such capacity gaps in the budget will affect the reputation of India abroad.

The MoD and the MEA’s share is less than many of the developing countries across the world, including our neighbourhood. There is an essential need to negotiate, join forums and, establish and expand diplomatic partnerships. Furthermore, adding innovative thinking in the development of both sectors will help India achieve three aims.

Amb Anil Trigunayat, a distinguished fellow at Vivekananda International Foundation, New Delhi and a visiting distinguished fellow at IMPRI, made the statement with reference to the allocation that, “Money makes the mayor go.” He consistently stuck on the point that funding is essential for the development of the defence and MEA sectors. With this funding, there is also need for quality and specialisation in the sectors concerned.

The world is moving and keeping the diplomatic talks limited will not pay off, there is a need for technology diplomacy and various other new arising areas. India is a hub of education and technology, greater collaboration will help in innovation and further in the growth of the economy. Diplomatic convergence is also good for power projection.

In the Union Budget 2024-25, there is a mindset seen for the line of credit given to the countries and was increased but many of the countries do not demand it today, as it adds up to their debts. In addition, on a new note, the budget also focussed on dealing with the investments and exports i.e. to designate money in India Rupees and not in the US Dollar. Like China, India needs to be realistic and focus on areas that really pay off.

India extensively lacks in delivery mechanism and as a result many countries that rely on India for its projects become upset. As is the case with the continent of Africa, in 8 years, India has not been able to hold the India-Africa summit. Furthermore, the Project that India sponsors must have high impact and quality so as to satisfy countries and maintain its unique position in the world as a major power.

Cultural diplomacy is a great area where India can heavily invest its time in, however, areas like Latin America should not be left behind. India can also focus on its diaspora diplomacy which requires more investment as the world is becoming more volatile. Furthermore, talking in terms of China as its rival, “at the end of the day what matters is how big is the check,” when it comes to its neighbourhood. Hence, India can look into this area as well.

While answering the question framed by Dr Mehta regarding the declining role of India in the African continent, Mr Trigunayat pointed out the increasing diplomatic mission of India in Africa. With such missions, high-level diplomats are also essential. Such missions need to be implemented effectively with adequate staff which India lacks in. Another cheaper and effective method can be honorary consuls which will further strengthen India’s presence. Engagement is needed with a proper review mechanism as it will be wise enough to “capitalise goodwill while it lasts.”

Mr Robinder N Sachdev, president of the Imagindia Institute, New Delhi and Founder of The Lemonade Party, offered an interesting and debatable viewpoint on the Union Budget 204-25 allocation in the defence and external affairs sector. Mr Sachdev initiated with the good news but by questioning it – that since the budget allocation for defence is limited, does it mean “India is not anticipating a war/s in the near future?” This good comes in parallels with bad news that as a result, our country is not preparing the military-industrial-technology complex fast enough for the 2030s.

It can also be analysed with the data on past budget allocations that the defence budget contribution to the GDP decreasing but there is a need for a strategic mindset that it can also be because of the increasing economic growth.

Mr N Sachdev equated India’s military preparedness with countries facing wars at their forefront, namely, Israel and Russia. What India can learn from these countries is that there is a significant need to keep enough budget reserves so that when the war breaks out, MoD can rely on it without disrupting the economy.

While commenting on the budget, he theoretically explained how the establishment of a Rs. 1 lakh cr corpus for deep tech can boost the defence budget. Although it is not allocated on the defence side, approximately 25 per cent will be spent on modernising defence. Thus adding 25 per cent, which equals 5000 cr to the existing defence budget i.e. 621,543 cr, the increased new total comes out as 626,543 cr. Apart from the Integrated Capability Development Plan, Mr Sachdev also emphasised on the need for consolidation of capital budget under a single head of defence services.

Concerning MEA, there is a prompt need for the inclusion of Latin America and the Pacific Islands in the Global South. India can also shift its focus towards building up on South China Sea and its inclusion in the Global South. India kept Bhutan at the top for its aid programme in this budget session followed by Nepal. Although the aid budget is low in both countries, these states maintain the top spot in global aid and partnership.

Chabahar Port is a good example of growing connectivity and India’s reach. Furthermore, the establishment of the Global Trade Promotion Body for MSMEs reflects India’s push to enhance its export capabilities. It is quintessential to solve the structural problem of the defence sector i.e. selling arms to the Government of India only. India can learn from the US as it has been able to sell its defence to various governments across the world

Major Gen. (Dr) P K Chakravorty, a VSM (Retd), a Strategic Thinker on Security Issues and a visiting senior fellow at IMPRI, New Delhi, called for extensive reforms in some areas as the person who has worked at the grassroots level.

Major Chakravorty brought up the debate of Guns vs. Bread & Butter during his discussion on the impact of the Union Budget 2024-25 on MoD and MEA. India has fought 4 wars at its borders and despite that, there is minor deployment at the borders as well and India lacks manforce. Israel which has world-class military preparedness but was still startled by the Hamas track and India can face such an issue in the near future. He quoted Kautaliya and Washington, as only those countries are strong which have military preparedness.

He claimed that the real budgets of countries like Pakistan, China and Israel are much more than their stated budget on defence and India primarily needs to look into the area. For improvement in the defence sector he called Agniveer an innovative scheme and emphasised that much time should be given to analyse it before jumping on to any conclusions. Major Chakravorty throughout his discussion insitently pin-pointed the need for PPP. There is an urgent need to give more and more to the private sector for a better playing field at the international level. Furthermore, manpower is essential in defence as well. China has seen a rise in manpower, so India needs to keep in mind the border skirmishes.

There is a need for some pragmatic solutions rather than purely relying on academic solutions. To deal with war requires an adequate amount of resources. For an adequate amount of resources, India needs to do a lot. It depends upon the government initiatives and innovative thinking to lead the development in the defence sector. He focussed on delinking the pension from the defence budget. Lastly, for increasing manpower, he emphasised that there is a dire need to increase manpower at the ground level while technological innovation can grow simultaneously.

Prof Swaran Singh, a professor and chairperson of the Centre for International Politics Organization and Disarmament at Jawaharlal Nehru University, New Delhi, presented his views by focussing on how budget statement can be seen in parallels with India’s agenda for peace and conflict resolution. As the budget shows where India want to be i.e. for peace or war? However, budget should be understood beyound just the figures and be seen with more caution. A broad bandwidth needs to be created under MEA as 2000 cr has been allocated, however, there is no data on how it will be enacted. India has always been the flagbearer of Peace and has promoted a normative foreign policy abroad.

Foreign Minister, Mr Jaishakar on X stated 4 main areas where India will focus in this budget session. These were, Neighbourhod, followed by Look East Policy, Global South and lastly Indians abroad. The fourth area of focussing on India’s abroad intrigued Prof Singh the most as PM Modi in his every trip abroad has always put forth the issues and concerns of India living in those countries. Such emphasis is a real good development under the MEA for its proper and effective functioning.

In terms of aids, India has 2.2 bn cr to it, however, if seen in coterminous with the other major powers, the amount equals to peanuts. USAIDS budget goes beyond trillion while the aid budget of Nordic countries goes beyond $500 bn.

For Atma Nirbhar Bharat India should focus towards its defence exports. It has been prioritised in the Union Budget 2024-25 which is a good sign but work should also be done on improving its credibility. Prof Singh contradicted with Major Chakravorty regarding the delinking of pension from budget. He pointed oout that in 1990s, India delinked the pension from defence budget but the decision was reversed. Furthermore, pension in defence budget constitutes $75 bn and without this hefty sum of money, defence budget is nothing.

India has been shifted from the spot of being third largest to fifth largest defence spender in the world and India needs to make changes to its defence budget keeping in mind a country with largest population on earth. It was wise for including veteran pension in the budget as well. There has also been increase of 30 per cent in BRO allocations keeping in mind the growing presence of China. Lastly, allocation in budget shou;d be made keeping in my the contributions of various sectors in the GDP, especially education sector here which will help in bringing the best for MEA too.

Dr Laxman Behera, an Associate Professor of the Special Centre for National Security Studies at Jawaharlal Nehru University, New Delhi, addressed whether the budget allocated will be enough for the security requirement of India. He suggested that however the big amount is, it will always be never enough for any country. It is easy to compare budget spent on defence with Pakistan as neighbour with a big share in defence budget. One should also keep in the mind the economy of the country, Pakistan is a small economy while India is a big. Since, India can’t increase its defence budget like China, it can works towards effectively managing it.

There is mismatch seen with budget allocation in various sector and the government is well of thebudget shortage too. Such gap in projections of resources needs to be dealt properly. Extra resources can be generated since the country is in good economic position. Apart from production and allocation, there aslo need to work on effective utilisation of resources. Dr Behera called the Agnipath scheme courageous and empahsised that manpower is essential for any army whatever the costs in incur. He also bought in the issue of procurement delays.

Many good projects are not done in time bound manner leading to delay in in implementation of effective policies. As is the case with Submarines, the recent focus on increasing deployment of submarines has been hindered because of procurement delays.

Regarding the issue of ideal budget, whether it should be set at 2 or 2.5 per cent of the GDP, the need of the hour is focussing on the effective utilisation of the budget available. Make in India programme has helped India a lot in Aatmanirbharta, various reforms have taken up but of the 76 per cent of the processed benefits goes to the countries in collaboration. This makes India only 24 per cent self reliant.

To achieve the aim of self-reliance, India needs to spend more on R&D, which in the Union Budget 2024-25 has been allocated only 5 per cent of the total budget. This has made India far behind many major powers like the US as well as single big MNCs like Samsung.

The Panel discussion ended with a Q&A session and the way forward was listed by all the panelists briefly. Prof Bhattacharya found coordination among various ministries as the essential factor for better development of MoD and MEA. Mr N Sachdev emphasised on ‘ a new world matrix under construction’ and not a new world order for which India need to grow its economy for better budget allocation.

Major Chakravorty focussed on the Theaterisation of Armed Forces while at the same time empowering the private sector for better defence outcomes. Prof Singh supported the need for expanding the workforce under MEA and called for maximising with minimum cost. Lastly, Dr Behera insisted on providing higher allocations for the R&D sector. All the panellists consented to the inclusion of honorary consuls to expand the workforce of MEA and expansion of defence exports for better working of the defence sector.