By Lt Gen P R Shankar (R)

When the OROP was introduced it was recognized that the defence expenditure will skew in direction of ballooning salaries and pensions with a proportional decline of army modernisation. It was all the time the satan within the Accountants thoughts. The train to rein within the manpower prices commenced in Dec 19. The Military toyed with the concept of extending service of Jawans by two years. In Nov 2020, the Chief of Defence Workers, late Basic Bipin Rawat  needed to extend retirement ages in some classes. It was not pursued past a degree. Curiously the justification of the Military was that “It takes a minimal of three years to coach a soldier. We enable him to go away as soon as he achieves proficiency in his stream. The goal is to retain skilled manpower”.

In April 22, one and a half years later, the state of affairs flipped fully. The Tour of Obligation proposal (Agnipath Plan) was put out within the media sketchily. 25% of the troopers could be discharged from service after three years, and one other 25% after 5 years. The remaining 50% have been to finish pensionable service. The subtext was all the time manpower prices. A trial was to be carried out. Many articles and views appeared associated to capacities of recruitment, coaching and discharge, unit degree issues, operational effectivity, age profile and technological functionality and so forth. Regardless of this, the army grapevine indicated that the hierarchy was adamant about this transformation as a result of one single reality – discount in manpower prices. Indications of a trial emerged. Up to now so good. There was little question that one thing needed to be performed to cut back growing manpower prices; failing which modernisation and induction of expertise have been at big danger. Additionally, the age profile of the Forces was creeping up. Across the similar time, information additionally filtered out that patriotic, disciplined and nicely skilled youth exiting the Agnipath would serve the society as position fashions to additional nationwide targets. A brand new issue within the supposed transformation emerged. Nevertheless, from then until now, there was no proof of an idea paper /research or of a street map. To that extent it’s certainly unusual that such a wide-ranging transformation is being undertaken with out a clear public doc or a public debate or parliamentary session.

A number of days earlier than the formal announcement of the Agnipath Scheme, information filtered out that the service interval could be 4 years together with coaching. Coaching could be reduce by half. Retention could be solely 25% as in opposition to 75% exit. Through the announcement and thereafter, the hitherto dominant manpower costfactor grew to become insignificant. The emphasis shifted to youthful profile, expertise adaptiveness and improved coaching strategies together with an occasional point out of simulation. Total it was being assured that the operational effectiveness of the Armed Forces will improve regardless of a shortened  interval of coaching and restricted interval of availability of ‘Agniveers’ in models. The flip from ‘It takes a minimal of three years to coach a soldier’ in Nov 20,  to a ‘soldier could be skilled in six months’ is baffling.What are the key applied sciences that are being inducted in every Arm / Service and at what stage of procurement/ induction are these?How can a Xth cross Agniveer adapt to expertise not but on the horizon? What are these particular coaching techniques/ simulators that are being procured to make coaching simpler than earlier than to justify shortened coaching durations? What are the elements which made a proposal of  exit of fifty % Agniveers in April to culminate into an exit of 75% in June? How is 4 years higher than 5 years of service?It’s a sport of smoke and mirrors the place loads is left for creativeness.

It will probably solely be concluded that as reported broadly in all media that the complete train commencing from Nov 20 was financially pushed overruling different points. That has been nearly confirmed by the truth that the one cogent motive to clarify 4 years’ service interval of Agniveers is that, in the event that they full 5 years of pension, they must be paid gratuity. In a current dialogue with very senior veterans of excessive reputation, who held necessary assignments throughout their careers it emerged that 4 years is just too quick a interval of service for an Agniveer and 75% is just too harsh an exit. Many suggest going again to the 7 12 months service mannequin of the yore. The present scheme places operational effectiveness in danger and doesn’t meet youth aspirations. An identical view has been expressed by a dwelling PVC awardee in an interview to NDTV. I’m assured that the serving officers are additionally satisfied about this of their hearts. Why has this come about? The Accountant has ambushed the system fully along with his darkish picturisation of dire financials. The political hierarchy has accepted it as gospel for  transformation.

The moot query is that -are the manpower prices so big that the nation can not afford a better and smoother transition? Are the Rasputin-like predictions true? Therefore a competing monetary outlook is required. There are three points on defence expenditure which want focus. Within the final decade (2011-12 to 2021-22), the finances of the Ministry of Defence has grown at an annual common fee of 8.4%, whereas complete authorities expenditure has grown at 10.3%. Throughout this era, defence expenditure as a proportion of central authorities expenditure decreased from 16.4%, to 13.7%. Defence expenditure as a share of GDP declined from 2.4% in 2011-12 to 2.1% in 2021-22. That is in distinction to the truth that India is the quickest rising financial system and is projected to be a 5 Tn USD financial system quickly. Merely put, India has not and doesn’t spend sufficient on defence. Manpower prices are nearly fastened and predictable 12 months on 12 months regardless of inflationary traits. Therefore, India scrounging on defence expenditure has impinged extra on modernisation quite than manpower prices alone. Any evaluation of presidency expenditure would possibly point out that more and more populist schemes have hiked Authorities expenditure greater than manpower prices of defence.  

Turning to defence pensions. Between FY12 and FY21, defence expenditure elevated at a nominal annual fee of 9.5%. On this interval, pension expenditure ballooned 14% year-on-year, whereas spending on capital rose solely 8.4%.One must rein in pensions. Little question about that. Nevertheless, is the state of affairs so tight? To start out with, defence pensions present pensionary fees for retired army personnel of the three providers, civilian defence staff and likewise staff of Ordnance Factories.  It covers cost of service pension, gratuity, household pension, incapacity pension, commuted worth of pension and go away encashment. Whereas the complete Agnipath focus has been on army manpower, the civilian ingredient has not been handled by ‘Accountant Rasputin’. Secondly, there isn’t a doubt that Defence pensions have witnessed a pointy hike because the introduction of OROP. Nevertheless, the outgo on OROP is a lowering dedication. It’s only for pre 2016 retirees. Financially the older veterans acquire most from OROP. They’re a dwindling quantity. With time, the discount on OROP expenditure will probably be drastic. Thirdly, the pension legal responsibility on defence civilians can also be a shrinking outgo because the introduction of the New Pension Scheme after 01 Apr 2004. The dip has already commenced as could be seen within the graph. It’s a delusion and a false notion propagated by ‘Accountant Rasputin’ that the defence pension liabilities will proceed to extend exponentially yearly as a result of improve in variety of retirees, quantity of dearness reduction, gratuity, and different retirement advantages. For my part, as a result of dwindling variety of OROP beneficiaries and defence civilian pensioners, general pension legal responsibility as a share of defence finances continues to cut back regardless of inflation.   

Additional, the federal government has undertaken reforms in OFB to make it into a company mannequin. The goal was to extend productiveness and rein in manpower prices. A part of that is ammunition administration. Ammunition of poor high quality has been an enormous monetary leak and operational detractor for a very long time. It has  additionally been an enormous repetitive and cancerous chunk of defence expenditure. A marginal enchancment in high quality of ammunition being produced and higher stock management will scale back this leak considerably. It ought to begin exhibiting outcomes prior to later with the brand new look defence manufacturing construction . Additionally, our defence exports are bumping up and bringing in additional revenues. Additional, reforms just like the detrimental lists and elevated capital expenditure for indigenous tools will lead to financial savings. That offers further fiscal house.

From the foregoing, it may be surmised that whereas there may be an simple want to cut back general manpower prices the state of affairs isn’t so dire that ballooning salaries and pensions will cramp defence modernisation or impinge upon safety of the nation until one thing drastic is completed. It’s a fallacy to fall prey to the Accountants ambush.Let me argue the opposite means round. Any vital discount in monetary burden is not going to accrue until the primary Agniveer would have retired from service after 15 years. There is no such thing as a speedy monetary profit. The Agniveer Scheme with out a social parachute runs the hazard of climbing up prices to society. The outpouring of public anger signifies so. The deeper and hidden prices are intangible and but to floor. The operational prices of this scheme will manifest in larger turbulence at unit degree, lack of expertise, disrupting detachment/part degree bonding and extra in the end. Is all this required?Most of this may be resolved by maintaining the Agniveer in service barely longer and giving him a softer exit by implementable Authorities schemes. This a lot is reasonably priced. 

The elemental principle of the Agniveer Scheme is sound – to cut back manpower prices, to lower age profile, to allocate larger sources to modernisation and expertise induction. The issue is that the answer sought at this level of time appears to be doing precisely the alternative. That is as a result of monetary principle being based mostly on widespread misconceptions quite than reality. The nation and its Armed Forces want a change. Nevertheless the change must be softer, the speed of transformation slower and extra absorbable. The nation can afford a slower fee of transformation which will probably be extra sustainable and significant. It’s time to break the Accountants Ambush.

(The creator is PVSM, AVSM, VSM, and a retired Director Basic of Artillery. He’s at present a Professor within the Aerospace Division of IIT Madras. He writes extensively on defence and strategic affairs @www.gunnersshot.com. Views expressed are private and don’t mirror the official place or coverage of Monetary Specific On-line. Reproducing this content material with out permission is prohibited.)