November 10, 2019

Rainy Days! Auctioning Assets to Meet Defence Needs

B Arjun

SIX years back, Prime Minister Modi embarked on selling the "great power” dream to the Indian masses. In 2014, Modi announced his intention to make India a “leading power” in the international order. He assumed that the country was in a perfect position to manage global affairs to serve national interests. Many RSS sympathisers are convinced that the removal of Article 370 from J&K was undertaken at an appropriate time because Modi’s charisma has tilted the current global opinion in India’s favour. It is often imagined that not just the Indian electorate but the world is awestruck by Modi’s charm offensive.

The Indian right wing elite believes that India’s massive population, its geographic location and its huge economy makes it a natural contender for a prominent spot on the global high table. Modi thinks that by showcasing his hold over the Indian diaspora, he can make the US president dance to his tunes.

The fact is these delusions of grandeur cannot overcome the harsh reality that India’s industrial and technological base is weak and its knowledge production centres are well-nigh nonexistent to impress the global elite.

However, Modi government as well as his supporters continue to live in a make-believe world, completely isolated from reality. Speaking recently at Bangkok, Prime Minister Modi said, “This is the best time to be in India. Many things are rising while others are falling. Ease of doing business, ease of living, foreign direct investment (FDI), forest cover, patents, productivity, and infrastructure are rising. While taxes, tax rates, red tapism, corruption, cronyism are falling.”

The ugly reality is that India is now in the throes of an economic slowdown. Neighbouring Bangladesh, growing at 8.1 per cent, is moving faster than India. Even Nepal is estimated to grow faster than India in 2019. Not just on the economic front, according to the World Bank figures, life expectancy in Bangladesh is 72, compared to India at 69.1.The infant mortality rate in Bangladesh stands at 25.1, compared to India’s 31.5.

Such is the state of the fiscal health of the government that it is weighing the option of privatising a few large state-run firms including profit-making oil refineries through strategic disinvestment in addition to a budgetary proposal to cut the state’s stake in some of these entities to below 51 per cent.

It is reported that in order to plug the government’s revenue deficit, the Reserve Bank of India (RBI) is planning to sell gold from its reserves for the first time in 30 years.

Earlier the government took Rs 1.76 lakh from RBI’s surplus fund. Commenting on the bankruptcy of the Modi government, Sitaram Yechury, Communist Party of India (Marxist) leader, tweeted “Modi government going bankrupt? Selling people’s wealth to meet its profligacy and for its propaganda, spin and spreading of untruths.”


The government’s fiscal health is so tight that the sovereign is finding it difficult to effectively run and modernise its standing army. It refused one-rank-one pension to soldiers in the name of fiscal prudence.

The problem is self-created. It stems from overambitious strategic outlook and a foreign policy that tends to punch above its weight. The policy of joining military alliances doesn’t come free. It demands more expenditure on buying equipment and platforms that are compatible and interoperable with alliance partners. It entails enhanced patrolling and exercises that leads to increased maintenance cost, and bloated fuel bills. 

financial stress is so acute that the government is contemplating to amend the 15th Finance Commission to raise funds for defence and internal security of India from sources other than government exchequer. The argument being advanced in support of the proposal is “a consistent 25 per cent shortfall between allocations and defence ministry projections.”

The amendment of the 15th Finance Commission will clear the decks for auctioning of defence land. The land sharks and privatisation hawks are already smelling opportunity. The rationalisation of the usage (euphemism for privatisation) of 1.75 million acres of defence land spread across the country is being proposed, ostensibly to free it from problems of encroachment.

According to experts auctioning will fetch roughly Rs 25,000 crore to the ministry of defence. This corpus could then be “invested in “secure financial instruments” and used to generate regular income for the varied needs of armed forces.   

The process of building public opinion through op-ed columns and other innocuous means is now on in full swing. The idea is being promoted through benign stories that suggest “over 9,600 acres of defence land across the country faces encroachment leading to legal battles between the ministry of defence with various states and municipal bodies”.

What this effectively means is that we have now reached a stage in nation’s history where defence ministry will have to be dependent on rentals to make both ends meet.

Great nations don’t try and squeeze money for the armed forces from every nook and corner. An exchequer that finds it difficult to maintain and sustain a robust standing army must tell the government to come down to mother earth and taper its great power aspirations.

You can’t ignore glaring asymmetries and compete with China, base for base in the Indian Ocean. You cannot conjure up security scenarios that demand greater expenditure on defence. You cannot securitise foreign policy and then imagine your diplomacy to succeed.

Indian foreign policy under Modi is too flabby and flamboyant; it needs to be a bit more sober and patient. Thousands of crores that Modi spends on events abroad is unprecedented.  A three trillion dollar economy must learn to appreciate its strategic limitations. Fetish and faith cannot form the basis of a mature strategy. The problem with Modi’s foreign policy is that it is far too grandiose for a medium power, with minimal indigenous capability to produce arms and ammunition.

The problem with the right-wing elite is that it tends to associate national standing with the will to use force. It moves on the assumption that degree of sovereignty is directly proportional to the hard power possessed and exercised by the country. However, what it conveniently forgets is that the rule is not applicable universally.

For a middle power, dependent for its arms supply and means of communications on external sources, sovereignty is inversely proportional to hard power aspirations. Realist pursuits to promote ones national interests make you more dependent and vulnerable.

Modi may think that he is an important leader of the globally ascendent right-wing populist movement. Probably, what he doesn’t realise is that he is entrapped in an imperial vortex, where his only option is to strengthen the US hegemony in the world.