CUTTING THE DEFENCE BUDGET: Reduce the Invisible Tail

Is the ministry of defence (MOD) appropriately structured to provide strategic and operational directions to the armed forces and handle situations in our borders? If what happened during the Daulat Beg Oldie incident in April 2013 is anything to go by wherein an ad-hoc body called the ‘China Study Group’ consisting of the National Security Advisor and bureaucrats from other ministries including heads of central security agencies sidelined the MOD and took control of the situation, the MOD had abdicated its responsibility by failing to prepare itself for such contingencies by wargaming and working out contingency plans and by integrating professionals in its organisation. Instead the ministry has accumulated irrelevant non performing flab by trying to build an empire for itself which is beyond its ability to manage efficiently. May be it is time the defence minister to took a look at his ministry too for corpulence. Where lies this flab and how big a drain it is to the country’s defence budget?

MOD
The MOD has the Department of Defence (DOD), Department of Ex- Servicemen Welfare (DESW), Defence Research and Development Organisation (DRDO), Department of Defence Production (DDP) and the Headquarters Integrated Defence Staff (HQ IDS) under it. The MOD is staffed with a plethora of bureaucrats and an unspecified number of clerical and other support staff (The organisational chart provided does not show the complete human resources employed by the MOD). Not a single professional military man has been allowed to participate in its working. Wasn’t this establishment meant to employ and support the defence forces whose primary job is to undertake military operations? Walking through the corridors of MOD, the sight of under employed staff, piles of dusty files, boxes and cupboards lying in the offices are a depressing sight to say the least. The MOD runs 29 other organisations (excluding Army Purchase Organisation, Directorate General Quality Assurance, Office of the Chief Administrative Officer, Security Office and the Vigilance Division). Could superfluous manpower in some of these organisations be the drain on the defence budget and the pension funds?

DESW
DESW under the MOD has a Pension Division and a Resettlement Division with three attached offices. The Kendriya Sainik Board (KSB) has 32 Rajya Sainik Boards (RSB) and 392 Zila Sainik Boards. The Government of India bears 75 percent of the expenditure of RSBs in the case of smaller states and 60 percent in the case of the rest. From the military veterans point of view, their utility, efficiency and cost effectiveness is questionable. In terms of achievement in relation to the number of military veterans, the story is not much different with the functioning of Directorate General Resettlement. As for the Ex–Servicemen Contributory Health Scheme (ECHS), it fails to make timely payments to affiliated hospitalsfor services rendered, resulting in some hospitals for withdrawing from the scheme. There is a perpetual problem of medicines in the ECHS polyclinics. The long pending proposal for outsourcing issue of medicines has not seen the light of the day. When medicines are not available, what is the use of specialists examining the patients, carrying out costly tests and prescribing medicines?

DRDO
DRDO headquarters at Delhi houses its corporate directorates viz. Budget, Finance and Accounts (BF&A), Extramural Research and Intellectual Property Rights (ER&IPR), Human Resource Development (HRD), Parliamentary Affairs, Personnel, Planning and Coordination (P&C), Public Interface, Raj Bhasha etc. Apart from the Scientific Advisor to the Raksha Mantri and the Secretary, Department of Defence R & D, the DRDO has seven Director Generals and five Chief Controllers and their offices.

DRDO has strength of 25,966 employees, out of which 7,574 are in Defence Research and Development Service (DRDS), 9,643 in Defence Research and Technical Cadre (DRTC) and 8,775 in Administration and Allied Cadre. It has 50 Laboratories under it employing over 5000 scientists and about 25,000 other scientific, technical and supporting personnel.

The Department of Defence Research and Development (DDR&D) a separate body formed in 1980 has one autonomous body viz. Aeronautical Development Agency, one joint venture viz. BrahMos Aerospace, four human resource institutions i.e. Centre for Personnel Talent Management (CEPTAM), Institute of Technology Management (ITM), Military Institute of Training (MILIT) and Recruitment and Assessment Centre (RAC), one deemed university viz. Defence Institute of Advance Technology (DIAT) and three certification agencies i.e. Centre for Military Airworthiness and Certification for airworthiness of products, Centre for Fire Explosive and Environment Safety for fire and explosives and Scientific Analysis Group for grading of information security products under its fold. Four research boards (Aeronautics, Naval, Armaments and Life Sciences) are also functioning under DRDO funding. Can some of these institutions be run by private sector educational institutions?

Most DRDO projects are characterised by time delays, cost escalations and poor quality control. The 5.56 INSAS rifle developed by DRDO after 15 painfully long years is nowhere comparable to the modern assault rifles. The night vision devices produced by the DRDO, though with 100 per cent imported Infra-Red (IR) tubes are far bulkier and heavier than the imported ones. Even in items like clothing and bullet proof jackets, the quality of the products has not matched up to the requirements.

Department of Defence Production (DDP)

The Apex Board of the Ordnance Factory Board (OFB) under the DDP is headed by the Director General Ordnance Factory Board (DGOF) and four additional Members of the rank of Additional DGOF responsible for staff functions. The Ordnance Factories are divided into 5 operating divisions each headed by an Additional DGOF.

The OFB under the DDP has 41 existing ordnance factories. Two new ordnance factories are coming up at Nalanda in Bihar and Korwa in UP. OFB employs about 93,519 personnel at present. Ordnance factories have been continuously upgrading their infrastructure. Each ordnance factory is headed by a General Manager of the rank of an Additional Secretary. The Indian Ordnance Factories Service (IOFS) is a civil service and the doctors in OFB belong to a separate service known as the Indian Ordnance Factories Health Service (IOFHS). The OFB also runs nine training institutes, three regional marketing centres and four regional controllers of safety. What if any, are the sales targets achieved by these factories outside its captive market, the defence services?

As per the report of the Comptroller and Auditor General (CAG) of India for the year ended March 2014, the production per employee in respect of ordnance factories for the year 2013–2014 was Rs 16.8 lakhs. In contrast, the production per employee in the case of private sector companies is at least six times higher as has been brought out in the subsequent paragraph of the CAG report, which states “For the Ordnance Factories to be competitive, they will have to exercise effective control over the cost of production, which presently is very high. The present structure and processes are not geared for such control….” This is indicative of poor staffing, and production management.

Besides the ordnance factories, the DDP has 9 Defence Public Sector Undertakings (DPSU) under it, each one, an empire by itself. A look at the performance of the DPSU’s is revealing. The average annual output per employee in respect of nine defence PSUs as revealed by the MOD in Parliament on April, 29, 2013 is Rs 38 lakh per employee. This compares poorly with private sector companies. As an example, Bharat Forge’s Pune facility with 4,000 employees generates a turnover of Rs 4,000 crore, giving employee productivity of Rs 1 crore per annum. Tata Power generated revenue of Rs 9,500 crore in 2011, with 4,627 employees, with each employee generating over Rs 2 crore. Despite the low productivity, the DPSUs pay out a significant amount as overtime. HAL had the largest overtime payout, with Rs 8,664 lakh paid to some 32,644 employees. Goa Shipyard, with the lowest employee productivity, paid Rs 1,167 lakh to 1,596 employees, adding up to over Rs 70,000 per employee per year.

The attached offices under DDP include Directorate General of Quality Assurance (DGQA), Directorate General of Aeronautical Quality Assurance (DGAQA), Directorate of Standardisation (DOS) and Directorate of Planning and Coordination (Dte of P & C). National Institute for Research & Development in Defence Shipbuilding (NIRDESH) is an autonomous society working under the aegis of MOD, DDP. Defence Exhibition Organisation (DEO) is a subordinate office under the DDP.

Do such huge establishments costing crores to the public exchequer contribute significantly towards the fighting efficiency of the defence services? Is there any justification for their existence in the present form? The Government’s capacity to fund and efficiently manage long gestation R & D projects is very limited. Its ability to train and create a pool of trained manpower to integrate specific systems towards manufacture of high technology weapons and equipment is negligible. Thus indigenous manufacture of complex weapon systems in the country is not the Government’s cup of tea. Outsourcing manufacture of military hardware, equipment, high technology systems and related R & D excepting in areas with security implications is therefore logical.

With necessary incentives, such a policy provides the motivation to the Private Sector to invest in R&D. Outsourcing manufacture and R&D exploits expertise besides providing better and closely monitored sleek industries ensuring efficiency, quality products and cost effectiveness. It spares the Government the burden of running and maintaining huge organisations besides acquiring the liability of huge pension bills of its employees. Why have we failed to see the practicality of the government running these establishments?

Cutting the flab?
The author was posted to the Directorate General Resettlement, MOD in 1973 and was in charge of resettlement of Emergency and Short Service Commissioned officers. On a query after taking charge, the five member office staff in the section confirmed that over 12,000 officers were yet to be resettled. During the course of initial settling down it was observed that the office seldom replied to any letter from an officer and when they did, it took anything beyond 10 days for the reply to be sent. Two months in the office suggested that the number of officers yet to be settled was probably exaggerated. Accordingly registered letters were sent to every single officer to ascertain if any resettlement assistance was required. The process of sending letters to over 12,000 officers took over a year plus for various reasons and it emerged that just about 140 or so officers really needed any resettlement assistance. A recommendation to merge the section (Res 4) with the section dealing with the resettlement of retiring regular officers (Res 3) was made. The recommendations were also made to the Staff Inspection Unit (SIU) which visited the organisation subsequently. However no changes were made at least till the author left the organisation in mid-1976. Yet another section and an IAS officer on part time duty to the section as Officer on Special Duty (OSD), for allotment of gas agencies and petrol pumps to the disabled and war widows remained intact despite no gas agencies or petrol pumps being made available for allotment by the ministry concerned throughout my stay (three and a half years) in the organisation

Conclusion

Despite the existence of a huge defence industrial base in the government sector, India’s arms imports have been growing consistently over the years, giving the country the dubious distinction of being the largest arms importer in the world. As for equipment like the TATRA trucks, even when the Indian private sector is quite capable of manufacturing a similar vehicle we chose a DPSU for procurement which acted as a mere middleman in importing them at huge costs to the exchequer. The question is, is it not time the MOD quit manufacturing and R & D domain and allow private sector to develop?

The MOD which includes the alphabet soup of its offices and subordinate organisations has accumulated excess weight over a period of time without any review. This flab is protected and is invisible. Has anyone attempted to review their role, the need for their existence, the manpower, the cost of running these establishments, the pension bill and the cost benefit ratio of these organisations? It is time these details are put out in public domain for the information of the tax payers. The Parliamentary Standing Committee for Defence will do a great service to the nation by reviewing these organisations if cutting the defence budget and the huge pension bill is the aim. It is astonishing that according to the 7th Central Pay Commission Report, the authorised strength of Defence (Civil) persons is 5.85 lakhs. The pension payout to the defence civilians amounts over 45 percent of the total pension bill! “No wonder the tail is wagging the dog”

Brig V Mahalingam is a veteran Infantry officer, based in the NCR. He is a defence analyst and frequently appears on TV shows on matters dealing with national security. A version of this article was earlier published in the Times of India blog of 31 May 2016.

No Comments Yet

Leave a Reply

Your email address will not be published.


How can we help?

Sign Up for Our Mailing List






Sign up for our newsletter to stay updated with the most comprehensive analyses of all military affairs from the best minds. We promise to not share your data with third-party vendors.