Despite the announcement of protests in several states, the government stood in defense of the plan, saying it would bring long-term benefits to the military.
The subtext is that the scheme would eventually reduce the army’s rising salary and pension bills, thereby saving a huge amount for the modernization of the armed forces.
But how much is India spending to maintain its military manpower and take care of defense pensioners. Here’s a look…
The central government introduces a huge bill for lakhs of veterans and defense civilians whose pension was more than the amount given to serving personnel last year.
In the FY 2012 budget estimate, the salaries and pensions of the forces account for more than 54% of the total defense budget.
On the other hand, the capital outlay is 27% of the budget. This is the amount that is spent on the purchase of new weapons and technologies for the forces.
And since a major part of the budget is allocated armyIts share in pension and salary is also at the highest level at 86 per cent and 79 per cent, respectively.
A closer look at the defense budget over the years shows that while the capital outlay as a percentage of the total budget has declined over the past decade, the share of pensions has seen a steady rise.
The share of capital outlay was the highest during 2011-12 at 30% of the total defense budget, falling to 22% (lowest) in 2018-19, and to 27% (in 2020-21). The recovery was on account of an additional expenditure of Rs 20,000 crore on the Navy’s fleet, aircraft and other equipment. Navy and Air Force.
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In contrast, India’s spending on defense pensions has grown at an average annual rate of 12% over the past 10 years (see graph above). This is higher than the average annual growth rate (8.4%) of the defense budget.
The share of pensions in the defense budget has increased from 18% to 26% (in 2019-20), which has come down to 24%.
The increase in the share of pension can be attributed in large part to the One Rank One Pension (OROP) scheme implemented in 2015. Under this, all defense personnel retiring in the same rank are entitled to equal pension, irrespective of their date of retirement. ,
In an article on The Times of India, economist and political analyst Ajit Ranade wrote that OROP was clearly a major factor that led to the design of Agneepath.
Ranade said capital expenditure on modernization has increased by 8 per cent in the last decade, due to the increase in pension and salary burden.
This is where the Agneepath model comes into play.
This scheme will not only reduce the average age of the forces from 32 to 26, but will also reduce the burden of soldiers on the exchequer by 75 percent, or ‘agniveer’, will be demonetised after his four-year tenure.
In the first year (2022), the Center aims to hire 46,000 firefighters, of whom 34,000 will leave service in 2026 with an exit package of Rs 11.71 lakh. By 2032, the military plans to have regular soldiers and firefighters in a 50:50 ratio.
In 2020, the Army submitted a rough calculation of how much money could be saved by trimming manpower through a draft proposal.
At that time, it proposed a three-year service model as opposed to the current four-year model.
As per the proposal, a comparison of the cost incurred by the government with terms of engagement of 17 years as compared to a sepoy (tour of duty) soldier with 3 years of service shows that the potential lifetime savings for just one sepoy is Rs 11.5. Is. (Crore) Thus the savings for only 1,000 jawans can be Rs 11,000 crore which can then be used for modernization of the Indian Armed Forces.
India Vs Others
In 2020, the Institute for Defense Studies and Analysis (IDSA) conducted a comparative study of defense pensions in India, UK and US.
The study found that unlike India, where generally all service personnel retire with a pension, a significant proportion of those who join service in the other two countries retire without earning a regular monthly pension.
The study noted that about 80 percent of service workers in the US retire without a pension.
In both the US and the UK, retirees are compensated with a lump sum payment or employment in the government and non-government sectors. It is similar to the concept of Agneepath.
But till now, when it comes to salaries and pensions, India has had to set aside a major part of its budget as compared to other big countries.
In a separate study, IDSA analyzed the military manpower costs of India and the US. As per the analysis, India spent around 26% of its budget in 2020 on pensions compared to 9% for the US.
According to other sources, the UK spent 14% of its budget on pensions in 2019. Meanwhile, Russia spent just 8.2% of its budget on pensions.
When it comes to military firepower, India has the second largest active personnel in the armies after China and ahead of the US.
However, it has very few naval ships and aircraft as compared to the other two countries.
In addition, the US and China are looking to cut their military strength to focus more on the navy, air force and technological advances.
With Agneepath, India is hoping to achieve the same objectives – making its armed forces lean and young and enhancing their technical prowess to meet the challenges of the future.