While it is true that economic growth provides the nation the wherewithal to ensure higher levels of national security, it is also equally true that without high level of security in the first place, it will be well-nigh impossible to achieve a respectable level of economic growth

The dawn of 2013 did not particularly bring cheer for the Indian armed forces as in the first week of January this year, an announcement by the Ministry of Finance about a decision to impose a cut of Rs. 10,000 crore in the current financial year on the capital acquisition budget for the Ministry of Defence sent a wave of agonising concern through the leadership of the three services. The cut in the defence budget which was only about five per cent of the total budgetary allocation for the current financial year, at first glance, appeared inconsequential. However, when viewed in the context of the budgetary allocation for capital acquisitions, the cut was substantial and significant. Quite understandably, this step by the government generated concerns in the three services about the inevitable impact on the ongoing modernisation programmes that is badly needed by all the three services.

The budgetary cut which is directed at reining in expenditure only on capital acquisitions is seen by the armed forces as somewhat inopportune. There are genuine apprehensions that some of the major acquisition programmes in the pipeline including the more than $20 billion ( Rs. 1,10,000 crore) deal for the 126 Rafale medium multi-role combat aircraft (MMRCA), 22 AH-64D Apache Longbow attack helicopters, 15 CH-47 Chinook heavy-lift machines, 197 light utility helicopters, submarines, 155mm artillery guns, missiles as also a variety of other smaller weapons are likely to be adversely affected.

But there is another side of the picture. With the growth rate in India’s annual gross domestic product (GDP) plunging to five per cent in 2012-13, from the high of over nine per cent in 2005-06, and the mandate to control the ever widening budget deficit to remain under five per cent, there is imperative need to cut government expenditure across the board. Undoubtedly, P. Chidambaram, the Minister of Finance, has a difficult and an unenviable task ahead of him. By virtue of the fact that the national elections are just a year away or possibly earlier, the task before the Finance Minister is rendered even more tedious and complex. The Minister of Finance must do everything in his capacity to ensure that the vote bank is not alienated in any way.

While on the one hand the Ministry of Finance has attempted to justify the decision to trim the defence budget stating that “fiscal adjustment was necessary since the economic situation was grim”, on the other hand, Minister of Defence A.K. Antony had earlier promised “a hike in the defence budget to cater to the threat of the expansive China-Pakistan military nexus”. However, while inaugurating Aero India 2013, on February 6, the Minister of Defence sounded less optimistic and stated that “India, the world’s leading arms importer, was passing through difficult days”. Warning of possible budget cuts in the next financial year, the Defence Minister went on to say that “the whole government is facing some financial problems, so we need to tighten in all areas for a better future.” While the Minister did assure the audience that the MMRCA programme would not be affected by budgetary cuts, the fact of the matter is that the pace at which contract negotiations for the Rafale are proceeding, in any case, finalisation of the much delayed mega tender is unlikely this year. This only means that the impact of the cut in the defence budget would be borne by the other smaller contracts some of which would have to be carried over to the next financial year.

Achieving a healthy balance between investment in defence and civilian sectors of the national economy demands the highest levels of finesse in management skills and immense political dexterity. Recent pronouncements of the Indian Finance Minister indicate that at this point in time, he is indeed negotiating a political and economic minefield while grappling with the economic challenges before the nation. The guns versus butter debate is eternal especially in a nation with finite resources and engaged in a desperate struggle to achieve a respectable level of economic growth and prosperity for its people.