Window Watch- AAP's Desh Bhakthi Budget, India's fall of Arms import and Election Promises
March 28, 2021
Aam Aadmi Party and its recent "Deshbhakti" budget
The Aam Aadmi Party (AAP) has been a successful entity in competing with the Bharatiya Janata Party (BJP). The party lost the 2019 general elections losing all seven parliamentary seats in New Delhi. Within a year, it gave a strong comeback winning 62 seats out of the total 70 seats in the 2020 assembly elections. This showcased the very nature of the party in outdoing the BJP when it comes to regional elections, giving confidence to other regional parties.
The party has spearheaded the fight against the ruling entity. It was able to politically manoeuvre the obstacles raised by the Lieutenant Governor in the past years. Despite all this, the Delhi government has established itself as a model state in the education sector with numerous progressive reforms. The government has also done well in the health sector.
The recent actions of the party are very different from their basic nature. The recital of Hanuman Chalisa by Arvind Kejriwal in public during the 2020 assembly elections surprised many. Though it's one's right to practice his religion and there is nothing wrong with his actions, it seemed the party had started playing the political cards that the BJP had been playing. The Chief Minister of Delhi and the President of the party was vocal in the recently concluded budget session symbolising this hard right turn.
Delhi's budget 2021-22 was indicative of this changing nature. Termed as the "Desh Bhakti Budget'', announcements such as plans to include Deshbhakti periods in schools, 500 tri-colour flag masts across Delhi, and programs every week for 75 weeks celebrating the Independence movement are a part of this budget. The Party supremo speaking on the Motion of Thanks to the LG's address, said that he is a devotee of Lord Ram and Hanuman and has been inspired by the concept of Ram Rajya to serve the people of Delhi.
The Mukyamantri Teerth Yatra Yojana announced in the budget provides the elderly with an opportunity to visit the Ram Temple in Ayodhya. The Delhi government will bear the cost of this pilgrimage program. While parties are shifting tactics, this upturn of showcasing religious belief is getting traction across regional parties. The actions of the Trinamool Congress in the battle for West Bengal and the Dravida Munnetra Kazhagam in the battle for Tamil Nadu display this same shift in tactics. Playing the religion card might aid to garner votes but it is not a step in the right direction in India’s case. The regional parties should not fall for this trap and should always bet on their performance.
The party has spearheaded the fight against the ruling entity. It was able to politically manoeuvre the obstacles raised by the Lieutenant Governor in the past years. Despite all this, the Delhi government has established itself as a model state in the education sector with numerous progressive reforms. The government has also done well in the health sector.
The recent actions of the party are very different from their basic nature. The recital of Hanuman Chalisa by Arvind Kejriwal in public during the 2020 assembly elections surprised many. Though it's one's right to practice his religion and there is nothing wrong with his actions, it seemed the party had started playing the political cards that the BJP had been playing. The Chief Minister of Delhi and the President of the party was vocal in the recently concluded budget session symbolising this hard right turn.
Delhi's budget 2021-22 was indicative of this changing nature. Termed as the "Desh Bhakti Budget'', announcements such as plans to include Deshbhakti periods in schools, 500 tri-colour flag masts across Delhi, and programs every week for 75 weeks celebrating the Independence movement are a part of this budget. The Party supremo speaking on the Motion of Thanks to the LG's address, said that he is a devotee of Lord Ram and Hanuman and has been inspired by the concept of Ram Rajya to serve the people of Delhi.
The Mukyamantri Teerth Yatra Yojana announced in the budget provides the elderly with an opportunity to visit the Ram Temple in Ayodhya. The Delhi government will bear the cost of this pilgrimage program. While parties are shifting tactics, this upturn of showcasing religious belief is getting traction across regional parties. The actions of the Trinamool Congress in the battle for West Bengal and the Dravida Munnetra Kazhagam in the battle for Tamil Nadu display this same shift in tactics. Playing the religion card might aid to garner votes but it is not a step in the right direction in India’s case. The regional parties should not fall for this trap and should always bet on their performance.
SIPRI Report 2020 & India's Fall in Share of Arms Import
A recent report published by SIPRI (Stockholm International Peace Research Institute) mentions India's arms import to have decreased by 33% between 2011-15 and 2016-20. India's share of total arms imports has declined to 9.5% in the period 2016-20 from 14% between the period 2011-15. The report mentions that this decline has been majorly due to the fall in imports from Russia. Russia's share of arms supply to India fell from a whopping 70% in 2011-15 to 49% in 2016-20. Presently, France and Israel are the second and third major suppliers of arms to India in the period 2016-20, with a share of 18% and 13% respectively.
The report mentions that this drop in India's arms import is due to the complex procurement process followed by the government and an attempt to reduce dependence on Russian arms. It is important to note that a majority of Indian inventory is of Russian origin. However, the other major reason for this fall in arms imports is the cut in the overall defence spending during this period.
India's defence spending stands at 13.73% of the total government expenditure for the year 2021-22 whereas it was 17.73% in the year 2017-18, 17.43% in the year 2018-19, 16.86% in the year 2019-20, and 14.05% in the year 2020-21. Some major procurements such as combat aircraft, mine countermeasure vessels, light utility helicopters, combat drones, very short-range air defence systems, assault rifles, etc have been dragging on for a long time. These dragging critical imports and the cut in defence spending adds up to the decline in India's share of arms imports. Moreover, when these critical procurements are done, the share of arms imports from Russian will increase again. The claim that this reduction in imports is due to the success of indigenisation is far-fetched. Effectively, the reduction is at the cost of the modernisation efforts of the three services.
Indigenisation of defence equipment has always been our Achilles heel. Measures are being taken to address this critical issue. However, the importance given to defence research and development and the amount India spends on R&D is low.
India spends less than 0.7% of its GDP on R&D, whereas the United States spends 2.8%, China spends 3.2%, the UK spends 1.7%, France spends 2.2% and Russia spends 1.1%. There is an immediate need to narrow down this gap and spend more on R&D to encourage innovation. As per the PM- EAC panel, the government looks to increase R&D expenditure to a targeted 2% of GDP by 2022 but finally it is time the government walks the talk.
The report mentions that this drop in India's arms import is due to the complex procurement process followed by the government and an attempt to reduce dependence on Russian arms. It is important to note that a majority of Indian inventory is of Russian origin. However, the other major reason for this fall in arms imports is the cut in the overall defence spending during this period.
India's defence spending stands at 13.73% of the total government expenditure for the year 2021-22 whereas it was 17.73% in the year 2017-18, 17.43% in the year 2018-19, 16.86% in the year 2019-20, and 14.05% in the year 2020-21. Some major procurements such as combat aircraft, mine countermeasure vessels, light utility helicopters, combat drones, very short-range air defence systems, assault rifles, etc have been dragging on for a long time. These dragging critical imports and the cut in defence spending adds up to the decline in India's share of arms imports. Moreover, when these critical procurements are done, the share of arms imports from Russian will increase again. The claim that this reduction in imports is due to the success of indigenisation is far-fetched. Effectively, the reduction is at the cost of the modernisation efforts of the three services.
Indigenisation of defence equipment has always been our Achilles heel. Measures are being taken to address this critical issue. However, the importance given to defence research and development and the amount India spends on R&D is low.
India spends less than 0.7% of its GDP on R&D, whereas the United States spends 2.8%, China spends 3.2%, the UK spends 1.7%, France spends 2.2% and Russia spends 1.1%. There is an immediate need to narrow down this gap and spend more on R&D to encourage innovation. As per the PM- EAC panel, the government looks to increase R&D expenditure to a targeted 2% of GDP by 2022 but finally it is time the government walks the talk.
Election Promises and Fiscal Miseries
It is election season in India’s southern state of Tamil Nadu and parties are promising to spend left, right and centre. The promises range from an arbitrary direct transfer of money to reserving 75% of jobs for locals, giving washing machines, computers, 4G data, and so on. Although these kinds of ‘welfare measures’ are not uncommon in Tamil politics, it is imperative to point out the cost of such measures- both moral and fiscal.
Tamilnadu is one of the most indebted states in the country. It has an outstanding debt of Rs 4.85 lakh crore (as of March ‘21) which is expected to increase to Rs 5.7 lakh crore by March 2022. The fiscal deficit is also expected to widen to about five per cent of GSDP. Even though Finance minister O Panneer Selvam blamed COVID for the rise in fiscal deficit, further inquiry suggests that the issue has been brewing in the pot. Even before the COVID fiasco, the numbers looked bad.
The Fifteenth Finance Commission report points out that the ‘State’s fiscal indicators have deteriorated drastically from 2011-12 onwards’. Moreover, the report goes on to analyse that ‘profligacy during 2014-16’ was due to the 2016 assembly elections. The State’s capital expenditure- GSDP ratio has also been dropping while the ‘Revenue Deficit- Fiscal Deficit ratio has approached 50% implying that most of the borrowings were being used to finance revenue deficit’. Considering these factors, the government must assess its financial state of affairs before going on a spree of unnecessary spending.
Apart from the fact that these pre-election promises act as bribes to buy votes, there is also a moral obligation for the government to be frugal. It should be pointed out that in a democracy, the government spends money only on behalf of the people, and therefore it should be wary of wastefulness. The Marginal Cost of Public Funds must be taken into account. Economists Ajay Shah and Vijay Kelkar estimate that the 'cost to society for every rupee of public spending is around three rupees'. Therefore, the government must spend only where it is necessary, especially in these post-covid times.
Assessing each 'welfare measure' promised in the manifestos is beyond the scope of this piece. However, as a thumb rule, we can assess any government intervention with three basic questions (Vijay Kelkar and Ajay Shah)- 'is there a market failure? Does the proposed intervention address the said market failure? Do we have the ability to implement the proposed intervention?' Unfortunately, most of the interventions proposed in these manifestos do not yield affirmative responses.
Tamilnadu is one of the most indebted states in the country. It has an outstanding debt of Rs 4.85 lakh crore (as of March ‘21) which is expected to increase to Rs 5.7 lakh crore by March 2022. The fiscal deficit is also expected to widen to about five per cent of GSDP. Even though Finance minister O Panneer Selvam blamed COVID for the rise in fiscal deficit, further inquiry suggests that the issue has been brewing in the pot. Even before the COVID fiasco, the numbers looked bad.
The Fifteenth Finance Commission report points out that the ‘State’s fiscal indicators have deteriorated drastically from 2011-12 onwards’. Moreover, the report goes on to analyse that ‘profligacy during 2014-16’ was due to the 2016 assembly elections. The State’s capital expenditure- GSDP ratio has also been dropping while the ‘Revenue Deficit- Fiscal Deficit ratio has approached 50% implying that most of the borrowings were being used to finance revenue deficit’. Considering these factors, the government must assess its financial state of affairs before going on a spree of unnecessary spending.
Apart from the fact that these pre-election promises act as bribes to buy votes, there is also a moral obligation for the government to be frugal. It should be pointed out that in a democracy, the government spends money only on behalf of the people, and therefore it should be wary of wastefulness. The Marginal Cost of Public Funds must be taken into account. Economists Ajay Shah and Vijay Kelkar estimate that the 'cost to society for every rupee of public spending is around three rupees'. Therefore, the government must spend only where it is necessary, especially in these post-covid times.
Assessing each 'welfare measure' promised in the manifestos is beyond the scope of this piece. However, as a thumb rule, we can assess any government intervention with three basic questions (Vijay Kelkar and Ajay Shah)- 'is there a market failure? Does the proposed intervention address the said market failure? Do we have the ability to implement the proposed intervention?' Unfortunately, most of the interventions proposed in these manifestos do not yield affirmative responses.
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