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Business Commentary/Dilip Thakore

Let Indian army get into business, ala China

The overwhelming majority of political pundits and economists in this country believe that policy formulation is much more important than personnel selection. That's why we have the heavily over-manned Planning Commission which spends all its time formulating detailed five-year plans for economic development, all nine of which have been way off target. There's a simple explanation: little attention has been paid to recruiting the type of people who can implement the grand strategies formulated by the Commission.

But suddenly, after half a century of elaborate plan formulation and searching for perfect solutions, there is a dim but growing realisation among economists and even politicians, that having the right man in the right job can make all the difference.

These somewhat anguished musings have been prompted by the havoc created within the Indian Air Force and the armed forces (collectively one of the few institutions of governance in post-Independence India which has not suffered a steep erosion of standards and values), by Mulayam Singh Yadav during his mercifully brief stint as Union defence minister. By endorsing a number of modifications in the pay package recommended for the IAF by the Fifth Pay Commission, Yadav has opened up a Pandora's box which is likely to spread dangerous disaffection in all the three defence services.

Shortly after the Pay Commission submitted its recommendations to the Union government in July, Yadav decreed a sharp increase (500 to 800 per cent) in the monthly 'risk allowance' of fighter and test pilots. This ad hoc increase was reportedly made on the prompting of air chief Air Chief Marshal Sareen who myopically seems to believe that fighter pilots are the be-all and the end-all of the IAF. Shortly thereafter, in October, IAF helicopter pilots who keep forward positions including the hazardous Siachen Glacier area supplied, went on an unprecedented civilian style work to rule before their risk allowance was raised to Rs 7,000 per month.

Quite predictably, the sharp disparity which consequently emerged between the monthly remuneration of IAF pilots and technicians and engineers whose special pay was raised by a mere Rs 375 per month by way of technical allowance, created widespread resentment within the air force. To the extent that the wives of aggrieved engineers began blockading air force bases all over the country while for the first time in the history of the nation's armed forces, IAF technicians and engineers marched in uniform into newspaper offices to register their protest.

While most thinking people would disapprove of the forms of protest adopted by IAF engineers, there is undoubtedly some merit in their grievance. The world over, flying allowance of pilots seldom exceed 15 per cent of basic pay. In the IAF, the new risk allowances double pilots monthly pay packets. As a result, well-qualified IAF engineers of high rank earn much less than their juniors who are pilots.

As top brass within the defence ministry are discovering to their discomfiture, populist adhocism of the type displayed by Yadav and Sareen can extract a heavy price. Even as a special committee has been appointed by the ministry to examine the disparities which have arisen in the IAF pay structure, the Delhi high court has combined a flood of petitions from IAF personnel into a collective public interest litigation writ petition.

Newspapers in neighbouring South Asian nations are headlining the 'vertical divide' in the IAF as a mutiny. On the other hand murmurs of disaffection from the army and navy about special allowances for IAF personnel who haven't engaged in combat for a quarter century, are getting louder. What a shambles!

The immediate problem of finding Rs 150 million per year to satisfy the demands of engineer officers of the IAF is unlikely to prove insuperable. However it is only a matter of time before demands for risk allowances emanate from other wings of the armed forces. In short, a massive and irrefutable demand for a sharp hike in the defence budget is likely to greet the new government when it assumes office in March.

Quite obviously, against the backdrop of the sharpening guns versus butter debate and compulsions to reduce the fiscal deficit, a significant increase in defence spending (currently Rs 338.40 billion or $ 8.46 billion per year) is not a realistic option. On the other hand, sharp pay disparities between civilian government servants and government servants in the armed forces is a development fraught with dangers to the nation's democratic polity.

But wait. There is a way out of this messy corner into which Yadav and other ministers (who gave away more than Pay Commission had recommended to civilian government servants) of the late unlamented United Front government, have painted the nation.

On several occasions in these very columns, I have proposed that this is an opportune moment for the armed forces which boast some of the finest engineers and project execution managers in the country, to augment their budgetary allocation by bidding for and executing infrastructure and other projects on a commercial basis. This suggestion has been greeted with silent contempt.

Fortunately, there is a precedent. The annual defence budget of the People's Republic of China in fiscal 1997-98 is $ 9.7 billion (Rs 378 billion). Against this the Pentagon estimates that the annual defence expenditure of China is about $ 38 billion.

This meagre budgetary allocation is supplemented by an estimated 50,000 business enterprises owned and operated by the PLA (Peoples' Liberation Army), According to Colonel P R Vasudeva, a fellow at the Strategic Research Centre, Chandigarh, these PLA-owned business enterprises employ more than 10,000 civilians and produce goods ranging from steel to cosmetic. Moreover, PLA companies have promoted 25 manufacturing units in the Shenzen special economic zone near Hong Kong in collaboration with American, European and English companies!

Quite obviously some lateral thinking is required to provide a better deal for the estimated 1.5 million citizens who serve in India's armed forces. Ad hoc fire-fighting and/or fudging the issue are options fraught with dangerous consequences for the nation. Very dangerous consequences.

Dilip Thakore