Members were referring to the letter written by the army chief to the prime minister. I was going through the records during the last few days to know what happened in the past. What I understood is that there is nothing new in it. From the days of Pandit Jawaharlal Nehru onwards... army chief of that day used to write to the prime minister and the defence minister about the shortage of arms and ammunition, and the need to strengthen the armed forces. So, it has been there since then.
It is not a justification. I don’t find anything extraordinarily wrong in the army chief writing to the prime minister or to the defence minister. They want the best equipment for their respective forces, so that their forces remain the most modern and effective to face any challenge. We have to improve in every area. We have to strengthen our armed forces by giving them the most modern platform, ammunition, and more officers.
And, we have to look after their welfare. These are our duties. We must do these. There is no second opinion about it. At the same time, with all the limitations, even today, we are not inferior to anyone. The Indian military... with all these limitations, is one of the best in the world. It is in great demand. We have defence cooperation with 47 countries, including all the major powers. All demand joint exercise with the Indian armed forces. Why? They think that they can also learn many things from our armed forces. Even today, with all the limitations, we are one of the best militaries in the world. But we have to further strengthen it.
Sir, a problem that everybody has pointed out is a large-scale import of equipment. In fact, it is not a happy situation for a country like India to import large-scale equipment from foreign countries. It can affect us. If the foreign policy of the country changes, it can create problem for us. We have realised now. Our first priority should be replacing the foreign vendors.
So, wherever possible, we are strengthening our public sector units (PSUs). All the defence PSUs are in the process of modernisation. All the thirty-nine Ordnance Factories are in the process of modernisation. But, we know very well that the public sector alone will not be able to replace all foreign vendors. So, whatever capacity that we have in the public sector, we will utilise it, we will expand it and we will protect the interest of the workers. But, at the same time, we will involve more and more private sector, along with the public sector, so that both public and private sectors can replace the foreign vendors.
For that, we have introduced a new Defence Production Policy. Sir, 100 per cent private sector participation is allowed, but foreign direct investment is allowed only 26 per cent. Recently, we have formulated a new Joint Venture Policy, so that even all the PSUs can now have a joint venture with the private sector. I hope with this new Defence Production Policy, we will give more space to the private sector also. The Indian public sector and the Indian private sector, with wholehearted support from the Defence Research and Development Organisation, in the years to come will be able to replace, to a large extent, foreign vendors from our Indian market.
I agree that there is some slackness in some areas of procurement. But, with all this, I am happy to inform the House that times are changing unlike in the past. Gone are the days where we used to surrender a large portion of the defence budget. Those are the past days; that is history. Now, things are changing.
In the last four years — 2008-09, 2009-10, 2010-11 and 2011-12 — the picture has been different. Sir, in 2008-09, we had spent 108 per cent of the budget estimates (BE) and 99.7 per cent of the revised estimates (RE). In 2009-10, we had spent 100 per cent of BE and 104 per cent of RE. In 2010-11, we had spent 104 per cent of BE and 101 per cent of RE. In 2011-12, the provisional figures show that we had spent 103 per cent of BE and 99.38 per cent of RE.
Even with regard to the budget for capital expenditure, we have spent money. There is a marked improvement. If you look at the last 10 years, in 2002-03, we spent Rs 12,932 crore only for modernisation. In 2009-10, we had spent Rs 38,427 crore of capital budget. In 2010-11, we had spent Rs 45,686 crore of capital budget. In 2011-12, we had spent Rs 50,184 crore of capital budget. Sir, capital expenditure is also increasing.
But, at the same time, I feel after assessing the new reality and emerging security scenario, we have to have a second look at the defence budget. The finance commission yardsticks will have to be changed. We realise that this year’s defence budget is not bad; Rs 1,93,000 crore is a substantial amount. But that amount is 15.5 per cent lesser than the estimated requirement of the services.
Last month, we had an assessment of the new emerging threat perception from neighbouring countries; we had a review of the situation with the services. That picture is a little problematic. In the 2012-13 Budget, the defence’s share was 1.9 per cent of the gross domestic product (GDP). But our armed forces’ demand this year comes to 2.35 per cent of the GDP. Even though this year’s defence budget is Rs 1,93,407 crore, yet, according to their projections, we need Rs 2,39,123 crore, that is, Rs 45,716 crore more. I do not know how to match this.
Take ammunition. In the Tenth Plan, the army got Rs 9,401 crore for ammunition. In this Budget, it got Rs 14,789 crore. So, the production is increasing. The production of PSUs is also increasing. Compared to the past, ammunition production has been increasing. But because of the changing threat perception, our armed forces need more new aircraft, more warships, more tanks, more helicopters, more fighter aircraft, and so on. All these things need more money. So, the country should have a second look at the defence budget. As the defence minister, I feel that India’s defence budget will have to be enhanced. This is my considered opinion.
Excerpts from Defence Minister A K Antony’s reply to a discussion on the ministry of defence in the Rajya Sabha in New Delhi on May 8