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Indian Army needs a draft!

Does the Indian Army need a draft, a conscription? General Kapoor, the Army Chief, believes that this may be resorted to in the future, and is not needed as of now. The mentation is ill-conceived, poorly thought out and half-baked. Even the dumb mainstream media can gauge that the real intention of this “sensationalism” is to raise an alarm – to ruffle the government and goad the pay commission into offering a largesse to the armed forces.

”Compulsory military service could be one of the avenues before the government sometime in the future, but it is not the stage for such a step now,” he [COAS] said at the customary press conference on the eve of Army Day.

Disclosing there was a current deficiency of 11,200 officers, the Army Chief said another point of concern for the forces was that most of those applying were ”not the right material.”

”Our deficiencies should not be met by lowering our quality standards,” he asserted. [IBN]

The sensational value of the cue [aka man bites dog] makes a great media copy. Without being disrespectful to the appointment of the Army Chief, General Kapoor sounds daft while venturing an opinion on conscription. The draft hasn’t worked in any modern democratic society. The USA in Vietnam is a prime example of pitfalls that accompany a draft and the damage it causes to the military as an institution. In any case, it will need a constitutional amendment to institute a draft or conscription for the Indian Armed forces. A modern, self-confident and economically vibrant India will never brook this softheaded suggestion.

Another question that amazes me and which hasn’t been raised by any commentator so far. Isn’t the draft ordered to make up for shortfall in quantity and not the quality of intake? The Indian armed forces, by the Army Chief’s own admission, don’t have a problem of numbers. The problem is of the quality of intake. How does the organisation undertake a “quality conscription” then? By going to IITs and IIMs and ordering them to a draft. But the Indian Army website itself proclaims that you might be an acclaimed engineer or a corporate manager, but could still be unfit to be an army officer. The idea smacks of an inextricable dichotomy, if not of sheer absurdity. In any case, there are no examples in the history of mankind where drafts and conscriptions have been solely for officers. The conscripts and draftees have always been recruits, handling low-tech equipment, and are invariably used as canon-fodder in the battlefield.

The related and more significant subject is of the mindset of the Army as an organisation. It believes in conscription and uses conscription in an indirect way – to stop its officers from moving out. The officers, who have not been overlooked for promotion, are not being allowed to quit the organisation even after having given their youth to the nation. India is perhaps the only modern democratic country where officers are being held captive in the three services [as virtual conscripts] against their wishes, all in the name of national security. The figures of officers who have applied to be released from the services and the ones granted release elucidates this point. This is conscription, Indian military style.

The ignorance of the current Army Chief and the daftness of his ideas reaffirms the issues raised by General Dave Petraeus. There is an urgent need for our service officers to go to civilian colleges and develop intellectual rigour. Else the foolproof path to senior ranks, based on “the nose to the grindstone” philosophy, will continue to propel more such gems in the military stratosphere.

The ostensible aim of the Army Chief is to “exploit” the media to raise alarm and put the government, the bureaucracy and the pay commission under pressure. However, the Chief may have uttered a self-fulfilling eschaton prophecy. The larger issue of perception and image ought to be considered by the Chief and his think tank. The image is not being irredeemably damaged only by the individual officers; the organisation is also contributing substantially to the effort by its focus on short-term gains.

For an average middle-class Indian with no direct relation to the services, and the mainstream media as the sole source of information, the most likely image of the Indian Army (or the Navy or the Air Force) will be — Corrupt, financially and morally; poorly paid and understaffed; preponderance of ego clashes and scandals in the top hierarchy; and suffering from an archaic organisational culture and colonial mindset.

A few more such stories in the mainstream media, coupled with the ones on corruption, spats, court cases and suicides, and the Armed forces would soon be, not only the least-preferred but the least respected profession. If our top brass continues to blindly propel the services on this path of self-destruction, the doomsday is really not that far.

General Deepak Kapoor can then gloat at having correctly prophesied the fall of Indian Army, unlike General JJ Singh, who put his foot in the mouth over the intake into academies issue. In any case, artificial intelligence is no match for natural stupidity.

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The seats at academy are always full

Oops! Did General JJ Singh actually say so in April 2007? If you believe the India Today, he did. How prophetic? What a visionary?

“Officers are leaving, but many youth want to join. Seats at our academy are always full.” [IT]

The facts, just eight months down the line, are -

At the National Defence Academy, near Pune, where candidates are selected after higher secondary, only 172 of the available 300 seats have been taken up.

At the IMA, which is celebrating its platinum jubilee this year, only 90 cadets have enrolled for the 250 available seats. [Telegraph]

If the matter was not so serious, it could be laughed away in passing. The Army (and the Navy and the Air Force) are hell bent on projecting the Sixth Pay commission as the panacea to all ills plaguing the services. It isn’t that simple.

Let us first look at the reality of the Sixth pay commission, behind the facade of bombastic claims made by various generals. If the grapevine is to be believed, the hike demanded in the basic pay by the three services has whittled down to 2.5 times (from 400% or 5 times earlier). On 01 January 2007, the effective pay (= Basic pay + Dearness pay + Dearness allowance) for a trooper was already 2.15 times the basic pay. Even if the government accepts 2.5 times increase in basic pay, it would make little or no difference in the effective pay as on April 2008. The arrears from the effective date of implementation (say 01 January 2007) would make a decent packet – it would be a subterfuge for lack of a real raise.

One of the other tasks of the Sixth Pay commission is to suggest reduction in the size of the government. The Army baulks and chafes at any suggestions of rightsizing. A quarter of the defence budget of Rs. 96,000 crore goes towards the salaries, while the defence pension bill of Rs. 14,000 crore is not counted towards the defence budget. Make no mistake, the issue of rightsizing the military is unrelated to lowering of guard for national security. It is about cutting wasteful expenditure – to get more bang for the buck [related posts here, here and here].

The Indian Army’s utilisation levels have changed little since the times of the British. In fact, it has only gotten worse. Take, for instance, the increase in colour service. Until the mid-1970s, soldiers served for only seven years, which saved the government from paying pensions to nearly two-thirds of the army, gave the force a more youthful profile and allowed soldiers who quit in their mid-20s to pursue new vocations, including a stint in the paramilitary forces. Today, the retirement age is between 37 and 40 years, when the soldier is too old to start off in another profession. At present, there are two pensioners for every serving soldier.

A soldier costs the nation roughly Rs 20,000 per month, including salary, pension and training costs. Yet, a vast majority of them are employed in non-core skills like driving and serving as orderlies. The army has over one lakh drivers and an equal number of sahayaks (orderlies). In foreign armed forces, only senior-most officials are entitled to vehicles; the rest drive their own cars and get an allowance.

Even as it hankers for state-of-the-art night-vision devices and main-battle tanks, the army has not made even the simplest advances in civilian supply chain management to improve its unwieldy logistics tail. Take, for example, procurement of vehicles from the private sector. These are first sent to godowns in Mumbai from where they are dispatched to field areas. Yet another glaring example is the huge depot in Allahabad where the army procures and stores items with low shelf-life, like paints and welding rods. [IT]

The Sixth pay commission can certainly do a lot for the Indian armed forces. A decent (and real) hike in salary would be an icing on the cake, but the cake patty would have to be rightsizing the Army. Unfortunately, the pay commission can’t do much about another major ill plaguing the army – an anachronistic organisational culture. That is another story by itself… for another day.

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Media : Army’s new force multiplier

… and its long-term damage to the organisation.

They certainly do harp on “exploiting” the media as a force multiplier in various military courses of instruction. The US military has nearly perfected the art with their usage of embedded journalists and the Indian Army also handled the media adroitly during the Kargil conflict. The lessons on “exploiting” the media have been learned both by the Army as an institution and by the individual generals.

Let us look at the use of media by the Indian Army as an institution. The print and electronic media is agog with the stories of poorly paid officers and the shortage of cadets in various academies that train them to be officers of the Indian Army. The stories are obviously based on facts and no one is doubting their veracity. It is the timing and manner of their sudden appearance across the spectrum that raises a doubt about the real intentions.

The most interesting one is in today’s Indian Express [unable to get the exact link after reading it in the paper link here]. It compares the salaries of Indian Army’s Brigadiers and Major Generals with those of Pakistani counterparts. Did the reporter ever hear of rank-inflation or cadre review in the Indian Army? The appointments tenanted by Brigadiers in Pakistan (in staff at least) are executed by Maj. Generals in India. And really, do you want to strike a comparison with Pakistan?

The whole media campaign about clamouring for better wages from the Sixth pay commission for the military has reached farcical limits, a ridiculous and ludicrous orchestration, soliciting pity and commiseration for a proud soldier.

Admissions to the National Defence Academy and the Indian Military Academy have plummeted to an all-time low with more than half the candidates selected for the courses that began this month preferring careers in the corporate world over a future in uniform.

Many candidates who cleared the written exam and the medical evaluation during the five-day tests of the Services Selection Boards chose not to enrol in the academies.

They have found a career with a starting pay packet of Rs 14,000 a month too unattractive when graduates of IIMs and IITs begin with salaries of at least Rs 80,000 a month.

“We are taking serious note of this. I hope there will be a much better deal for the services this year,” defence minister A.K. Antony said today.

The armed forces have proposed salary hikes of two to two-and-a-half times their current wages to the Sixth Pay Commission. [Telegraph]

The aim is to push the government into a corner, earn the sympathy of the public at large and seek a greater share of benefits in the sixth pay commission. This tendency was on view during the period preceding the preparation and release of Fifth pay commission as well. And it didn’t work any wonders then. It is almost certain that the government, the bureaucrats and the politicians, have become immune to such “planted” stories by now.

There is a major fallout of these stories in the media. Not only do they fall on deaf ears of the establishment, they also cause consternation among the junior and middle level officers. It generates a poor self-image and lowers the self-respect for his own job in the eyes of a younger officer. It breeds cynicism and despondency and damages the morale of the officer cadre. Moreover, it creates a poor image and perception of the Army amidst the lesser informed civilian populace who depend on the mainstream media for their inputs. A possible target group in smaller cities and towns, which is at the forefront of subscribing to the vacancies in various military academies, is palpably disillusioned because of this perception of a poorly-paid, suicide-prone and corrupt organisation.

Meanwhile, fresh salvoes have been fired in the second round of bout between the COAS General Deepak Kapoor and the Northern Army Commander Lt General Panag. A media report tries to cast aspersions on the integrity of General Panag for bulldozing the name of a corrupt Brigadier for the prestigious NDC course.

The process of selecting Brigadiers for the NDC is excruciating, beginning with a detailed preparation of the merit list based on their annual confidential reports, awards, honours and other criteria. Each name on the merit list is then taken up and discussed in detail by a committee headed by the Army chief and comprising Army Commanders.

This time a list of 28 was made for a vacancy of 14. According to sources, during discussions General Panag pitched for two Brigadiers, including the one in question. It is not clear how the two Brigadiers, who were not among the first 14, finally made the list, since the Army chief and other Commanders were in attendance too.

Once the list was prepared in early November, the way the two Brigadiers, both posted in the Northern Command, made it was brought to the attention of the defence ministry, which sought an explanation from the Army headquarters. [DNA]

It doesn’t take great wisdom to understand the reason behind the story — to discredit Lt. General Panag. Not that Lt. General Panag is a paragon of virtue himself. By all accounts, he is an egotist, self-obsessed, petulant and idiosyncratic General, a braggadocio and a show-off, who has been disliked (and barely tolerated) by all his subordinates.

Media in all parts of the world loves a sensational story. The army and its Generals think that they are exploiting the media by feeding them their stories. But they are greatly mistaken; the media is “using” them instead. Media is a ferocious and unshackled tiger that will one day come back and bite the hand that is feeding it today. The army and its generals better be warned. Soon, it may be too late to retreat to safety.

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Time to abandon UN peacekeeping

India should look at the company it keeps in these missions.

PM Manmohan Singh’s address at the Passing Out Parade of the Platinum Jubilee Course of the Indian Military Academy in Dehradun last December was full of bromides, homilies and inane platitudes. Amidst the rhetoric-laden cacophony, the PM also touched upon the Indian Army’s contribution to UN Peacekeeping Operations (UNPKO).

By strengthening the foundations of our democracy, and defending democracy at home and abroad, through UN Peacekeeping, you have set an example for nations and societies across the world. [PIB]

The commonly held belief is that India’ international standing and world image have been enhanced substantially due to its contribution to UNPKO in nether parts of the world. Indian defence circles do not tire of pointing out that besides enhancing the international prestige, participation in UNPKO provides valuable training and experience to India’s armed forces. A cursory glance on the statistics at the United Nations Department of Peacekeeping website is revelatory of the effective Indian contribution to various peacekeeping operations of the UN. Amidst the claptrap of world peace and enhanced Indian sphere of influence, it is a worrisome sign that nearly half the contribution of troops in UNPKO [as on 30 November 2007] is from India and its South Asian neighbours, Pakistan, Bangladesh and Nepal.


Military Observers














In comparison, the contribution from the developed western nations barely registers a presence on the muster rolls of the UN peacekeeping forces. The data contraindicates a nation’s troop contribution to the UNPKO as an index of influence or power in today’s geopolitics.


Military Observers


United States



United Kingdom












New Zealand



Some might argue that the minuscule contribution by western nations can be justified considering their population and the size of their militaries. However, the argument is specious when China’s contribution to the UNPKO is considered, which is only 69 Military observers and 1574 troops. If one is known by the company one keeps, it is not a very august company for India in the UNPKO.

It is indeed lucrative for the militaries from developing countries to serve with the UN as the UN allowances are often far higher than the salary soldiers get at home in these countries. Margarita Mathiopoulos, chief executive of the European Advisory Group, called these forces “the usual suspects of UN peacekeeping, the impoverished third-world armies who only deploy their soldiers for their per diem.” Currently the UN reimburses the governments around $1,100 per peacekeeper per month, which covers their pay, clothing, gear, equipment and personal weaponry. The national governments decide the pay of the peacekeepers based on the national salary scale. This often means that the country can make a profit in US dollars by deploying vast numbers of troops.

Though true for many other developing countries, India’s current economic strength (unlike Bangladesh or Nepal) seems to render this contribution in US dollars redundant to a larger national rationale for participating in the UNPKO. In fact, the Indian Parliament was informed in May 2007 that approximately $ 228.99 million is due from the UN towards reimbursements for deployment on various missions.

India’s engagement with UNPKO reflects its deep desire to influence world affairs and to be counted as a strategic power in the community of nations. India prides itself as a glorious 5,000-year old civilization, but its dream to be a powerful modern, nation-state still remains largely unfulfilled. Over the decades, Indian establishment has continued to regard international peacekeeping as a legitimate tool for achieving the global power status. Peacekeeping, with no internal political dissonance, permits India to reconcile the potential tension between the commitment to international idealism and the requirements of national security.

But while it creates more opportunity for India to boost its international image, it also increases risks to its troops of falling prey to hostile groups like the rebels in Sierra Leone. More Indian peacekeepers have lost their lives than any other nationality while serving with the UN. Despite these sacrifices, the public perception in India of these missions has not been very positive as most of the UNPKO have failed to attain the desired modicum of success. India’s failure in Sierra Leone with African Union peacekeepers greatly soured India’s relationship with the West African nations and it took India almost a decade and a very strong economic diplomacy to reestablish those relationships. The charges of corruption and sexual abuse against the UN peacekeepers, including India, which are being investigated by the UN, have also dented India’s image in Africa.

India’s long time aspiration of gaining a permanent seat in the UN Security Council also runs parallel to its desire for playing a decisive role in the formulation of the UN mandate for peacekeeping operations. However in 2006, the African Union opposed Brazil, Germany, India and Japan (G4) in a joint resolution on enlarging the composition of the Security Council, which eventually led to the stalling of the reform process of the UNSC. The myth of India’s soft power and goodwill in Africa accreted by participating in various UNPKO in the continent was negated by this action of the African states. An honest appraisal suggests that UN peacekeeping is not a ticket to global power, as the bulk of the international peacekeeping burden is shouldered by poor Third World countries. In particular, in public, governmental and UN perception around the world, this may have contributed to the bracketing of India with poor third world countries with bloated and antiquated defence forces, instead of a highly professional and modern military force.

It is time the Indian government took a hard look at the Indian contribution to UNPKO. It is repeated ad infinitum that the Indian Army, Navy and the Air Force are suffering from an acute shortage of quality manpower and resources. The prolonged deployment of Army in counter-insurgency operations and internal security duties has also evidently taken its toll. By withdrawing from the UNPKO, the Army will be able to either trim the excess flab or provide greater relief to troopers deployed in hard areas. Furthermore, the UN peacekeeping forces themselves are considered by most observers as a motley crew of impoverished nations with substandard armies that are in it for money. Indian military’s standing suffers in the international arena due to its association with the perceived image of unprofessional mercenaries from other under-developed nations.

Indian military should maintain a token presence in the UNPKO, by deploying military observers and limited number of troops in countries where India has certain geostrategic interests (like Sudan or in the Middle East). It will enhance, and not diminish – as most analysts in the MSM would like us to believe – India’s image as a self-confident modern nation, plunging the right levers of world power a la other major nations. To boot, it will also restore the professional status of the Indian military by dissociating them from other rag-tag armies of third world countries.

Update(16/01) – This year’s Army Day is special for Indian troops as the United Nations Mission Report has heaped lavish praise on them for their role in West Africa, West Asia and Europe. [Sahara]

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Army’s path of self-destruction

…by pressing for adoption of AVSC-2 report.

The original purpose of forming the Ajai Vikram singh Committee (or AVSC as it has come to be known), was to find a way to ensure that officers placed in command of the Indian Army’s basic combat units, were in a younger age bracket. Over the years, a number of factors had combined to push the age of Battalion and Brigade Commanders to an average which compared unfavourably with their counterparts in other armies ; and it was felt that as a result their physical and mental dexterity maybe severely tested under fire.

The Navy and IAF did not have a similar difficulty, and initially these two Services believed that the Army would be able to resolve its problem by making necessary changes in personnel management and promotion policies. However, a degree of unease began to be felt in NHQ and Vayu Bhavan, because the Army had, just a few years earlier, departed from a pre-Independence Indian Army tradition, and upgraded Battalion Commanders from the rank of Lieutenant colonel to full Colonel (which was till then not so much a rank, as an appointment). The simplest way of reducing the ages of Battalion and Brigade Commanders would have been to revert to the old rank structure, but it became evident that the favoured route was to seek more vacancies in the latter rank.

‘Selection and maintenance of aim’ is a cardinal principle of War, but somebody, somewhere seems to have lost the thread, and the aim got shifted from ‘reduction in age of Battalion Commanders’ to the more ambitious one of ‘improving upward mobility and career prospects of officers’ and this resulted in a wide-ranging quest for additional higher ranks, including the creation of a new rank to be known as ‘Colonel-General’ !

Thus, Ajai Vikram Singh, an able and forthright Civil servant, when asked to consider a substantial increment in the number of senior ranks, posed a very pertinent question; what functions do two and three –star officers perform today, and when you have a 150 more of the species, how will they occupy themselves? Since the query remained unanswered, he held this issue in abeyance, and moved on to the more pressing problem that the AVSC had been convened for: how to bring down the age of Battalion Commanders?

The Indian Police Service seems to have found a panacea for such problems by some how acquiring the discretion to instantly incorporate large number of senior vacancies without awaiting ‘cadre reviews’. A state may thus have one DG Police, but can arbitrarily create any number of Additional DGs to serve alongside or under him. However, Service ethos requires that the structure of the armed forces must remain sharply pyramidical in shape, with the Chief at its apex. Similar pyramids have to be replicated in each unit of the Armed Forces, and ‘bulges’ become awkward to manage.

Of all the methods available to the armed forces, of bringing down the age in a particular rank, the easiest one is to ask for more vacancies, and promote hordes of people.But once you promote officers in large numbers to a particular rank, it is only a matter of time before they fall due for the next promotion. So in order to get over the ‘bulge’ in this rank, you will need more vacancies in higher ranks, and that is what has happened in this case.

The AVSC in part I of its report, while telescoping the time scales for promotion up to the rank of Colonel, also recommended a large increase in vacancies in that rank. This recommendation was based on two fundamental and vital premises. Firstly, that a very high proportion of the intake would be of Short Service Commission (SSC) officers, who would leave on expiry of their engagement. And secondly, that those who could not be promoted would be absorbed laterally in the Central Police Organisations (CPOs) or find alternate avenues in the industry. This was to constitute the so called “ Peel Factor’ which was meant to ensure that adequate vacancies in higher ranks would be available for the hard core of deserving permanent commissioned officers; thus improving their promotion prospects of providing ‘Pull Factor’. That was the theory. In real life, the numbers joining through the SSC entry stagnated, because many young men did not relish the thought of being put back on civvy street at age 30-35. The Home Ministry (perhaps with good reason) refused to absorb anyone in the CPOs, and the industry just continued to disregard ex servicemen, except as security staff.

All this is in conformity with the Great Indian Tradition of paying lip service to the soldier in times of war, and totally neglecting him in peacetime. If the political parties truly had the interest of the armed forces at heart, they would have sought the implementation of these measures through parliamentary legislation, instead of devoting themselves exclusively to vote catching issues. The USA has enacted a comprehensive Veterans’ Bill to cover issues of this nature, and we should have taken a lead from it.

Although the Army seemed very upbeat with the immediate prospect of early promotions and many extra colonels, the Navy and IAF were not happy with this sudden (and Unwanted) jump in ranks, because it upset the traditional rank structure in their combat units. After all, a ship commanded by a captain (colonel equivalent) could not have more than one officer of that rank on board. Similarly, an IAF squadron commanded by a wing Commander (Lt Col equivalent) could absorb one or two additional officers of that rank, but things would become awkward when close to half the officers sitting in the crew Room became wing commanders. But that is what happened when AVSC Part I suddenly flooded the Services with extra officers in ranks that they found hard to accommodate. The result was foregone conclusion: devaluation of ranks, for short term gains.

Having partaken of the benefits offered by AVSC part I, the birds have now come home to roost for the services. The large number of officers promoted under its provisions are coming up for the next rank, and unless many more vacancies are made available in higher ranks, (through AVSC Part II) a substantial percentage of officers will be passed over, resulting in much dissatisfaction. By starting the rank inflation game, the Services have regrettably walked into a dangerous trap, and triggered off a vicious cycle which can only result in proliferation of ranks and their consequent devaluation; thus damaging the time honoured pyramidical command structure.

This is the extract of an article by the former Naval Chief, Admiral (Retd) Arun Prakash. [HT- JaiSena.com]

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Oil pricing in India

The crude oil prices have finally touched $100 per barrel – a psychological barrier and a statistical inanity. The composition of Indian crude basket represents average of Oman & Dubai for sour grades and Brent (dated) for sweet grade in the ratio of 59.8:40.2 since April 2006. The Indian crude basket has touched a high of over $92 in the new year, but is yet to hit the three-figure mark.

India imports about 76 per cent of its crude oil requirements which amounts to an oil import bill of around $50 billion every year. India’s crude oil import bill rose by 3.48% in rupee terms and 16.67% in dollar terms during the first half of the current fiscal year. The appreciation in rupee value by 12.3% this year, the most since at least 1974, has helped partially offset the sharp rise in global oil prices. As per the Government, every one rupee appreciation in the exchange rate of Indian rupee against US dollar will help reduction in the net oil import bill by around Rs 3950 crore. It should help that the rupee is forecast to advance 3.4 percent next year to 38 per dollar by the end of December, according to the median estimate of 22 strategists surveyed by Bloomberg News.

CNBC-TV18 believes that at current rates, petroleum has an under recovery of nearly Rs 9.5 per litre, diesel Rs 11.3 per litre, LPG Rs 380 per cylinder, and kerosene Rs 21 per litre. However, Indian Express estimates the loss to marketing companies for petrol at Rs 8.74 a litre, diesel at Rs 9.92 per litre, kerosene at Rs 20.53 a litre and LPG at Rs 256.35 per cylinder.

As per the government policy of 2003, the subsidy component by the government has remained constant since 2004-05 at Rs 22.58 per per LPG cylinder and Rs 0.82 per litre of kerosene. The balance subsidy is provided by the marketing companies from their own pockets.

The gross under-recoveries in 2006-07 by the three oil marketing companies – IOC, BPC and HPC – were Rs 28584 crore for kerosene and LPG, and Rs 20803 crore for petrol and diesel. The estimated under recoveries by oil marketing companies during April- September 2007 have been Rs13814 crores on kerosene and LPG, and Rs 12549 crore on petrol and diesel. If current price trends hold, the under-recoveries to the marketing companies are estimated to be around Rs 70,000 crore this financial year — around o.75% of India’s GDP. This has to be shared between the three marketing companies, the upstream companies – ONGC, Oil India and GAIL – and the government. The upstream oil companies have already contributed Rs 8788 crore for the period April- September 2007 to partially compensate these under-recoveries by the oil marketing companies. The contribution by the upstream companies in 2006-07 was Rs 20507 crore and is likely to rise by another 5000 crore this year.

In 2006-07, the government issued oil bonds worth Rs 24,121 crore to marketing companies for the four products, while it had issued oil bonds worth Rs.11,500 crore in 2005-06 for losses in marketing LPG and kerosene. The government has decided to issue bonds worth Rs 23,457 crores this year, which is not likely to meet the estimated deficits of the marketing companies.

If additional bonds are not issued by the government this year, the deficit can only be met by increasing the domestic prices of the products. The last time the domestic prices of petrol and diesel were raised was in June 2006. The prices of petrol and diesel were revised downwards twice afterwards, in November 2006 and in February 2007.

Domestic pricing continues to be a politically sensitive topic, with a broad consensus across the political spectrum to stall any upward revision of prices. There is a Group of ministers, chaired by Pranab Mukherjee, to suggest an alternative model for pricing of domestic products. As with the Indo-US nuclear deal, the left and the right are both opposed to any hike in prices of domestic petroleum products. The government is also worried about the inflationary impact of higher domestic prices of petroleum products. A cut in the customs duty on the crude oil and in the excise duty in petrol and diesel by the government is likely to keep the prices suppressed for some more time.

The subsidies, whether direct and transparent by the government or indirect as in tax cuts, oil bonds and compensation by government owned upstream companies, are a drain on the resources of the government. The losses to the exchequer can only be reduced when the consumer pays the right price for the product.

Note – Reuters has an interesting factbox summarising the oil subsidies by various Asian countries, including India and China.

Cross-posted at the Indian Economy Blog

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Army Chief versus Northern Army Commander

Lt. General H S Panag, GOC-in-C of Indian Army’s Udhampur based Northern Command, is meeting the Defence Minister Mr. AK Antony today to plead his case against the Army Chief, General Deepak Kapoor. Read various versions of the story at CNN-IBN, IANS and The Telegraph.

Army Chief General Deepak Kapoor has asked for the removal of his top commander, Lt General HS Panag. Kapoor has pressed the government for the removal of Panag as the head of the Northern Command.

Panag has protested claiming that his removal will lead to a cover up of Army corruption that he exposed in Jammu and Kashmir. He has hinted at the misuse of special financial powers delegated to Army Commanders. The system, he suggests, is not clean. “The system is not clean. It is being used,” says Lt Gen Panag.

During his one-year tenure in Kashmir, General Panag has initiated 15 inquiries into Army purchases. The problem is that most of these cases relate to the tenure of General Kapoor as Northern Army Commander in 2006. Kapoor is not amused. And the spat is out into the open. [CNN-IBN]

The spin being put on by both the sides in the media makes for some interesting reading. The Chief’s camp posits that it is the jurisdiction of the Chief to change the Army Commander and the approval by the government is only a formality. Not a word about the corruption cases when he was the Northern Army Commander. So much for the civilian control of the military in a democracy and integrity in uniform!

Lt. General Panag is positioning himself as a “crusader-hero”, who is out to clean the stables. This ingratiates him with the current Defence minister, Mr. Antony, who makes an extra effort to be perceived as “Mr. Clean” himself. Notwithstanding his own personal standards of probity, Mr. Antony’s sanctimonious attitude has placed a roadblock in the path of many defence deals.

What effect does it have on the rank and file of the Army? It only tends to affirm their cynicism about the senior ranks — corrupt, venal and egotist generals fighting their own petty personal battles in uniform.

This instance strengthens Pragmatic’s exhortation to the media and the civil society that the Indian military is not above criticism. Is anyone listening?

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Grimmest times for Indian defence

…says Claude Arpi.

In a column for the Sify news, noted French author and analyst Claude Arpi analyses the pathetic state of India’s defence sector. Pragmatic has covered all the facts raised by Arpi in the post on the year-end review by the Defence ministry. Arpi looks solely at the acquisition problems faced by the defence ministry, but conveniently ignores the huge personnel and HR problems gripping the services.

There is an amateurish attempt by Arpi to pass the blame to the protean bureaucrats of the defence ministry for all the ills, while absolving the other two pillars of the national defence triumvirate — the political masters and the top military leadership.

Indeed, India can be proud to be the largest democracy in the world and the armed services can be proud to have an honest Minister, but it is today clearly not enough. India should be ready for any eventuality and for this, drastic changes in the bureaucracy are required. Will the Government will bold enough to take the necessary step is another question. [Sify]

The present culture of the service headquarters, their feeble senior leadership and lack of a coherent vision of the services have been a bane of the system. The complicity of the services and their leadership for the present mess in military acquisitions [DRDO and foreign suppliers included] is well-documented to need repetition. If the difficulties in HR and personnel areas of the services were also to be highlighted, the services would have to apportion a major share of the blame.

As many defence analysts have suggested in recent times, a honest defence minister is not necessarily a competent and effective defence minister. The ultimate responsibility for all decisions [or lack of them] rests with the elected political masters in a democracy and that is the case in India as well.

It is not one’s case that the bureaucracy is beyond reproach for the pitiable state of the defence sector in the country; it is just that the military leaders and the political masters are no less culpable for the current mess. The synoptic wisdom is contained in the words of P.J. O’Rourke –

“The three branches of government number considerably more than three and are not, in any sense, ‘branches’ since that would imply that there is something they are all attached to besides self-aggrandizement and our pocketbooks. … Government is not a machine with parts; it’s an organism. When does an intestine quit being an intestine and start becoming an asshole?”

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2007 : Year-end review by the Defence ministry

…is perfunctory and shorn of objectivity.

As another calendar year trudges to an end, it is time for another year-end review by the Defence ministry. A thorough review by any corporate organisation should focus on both the strengths and the weaknesses observed during the period. The review by the MoD is anything but a perfunctory compilation of perceived “successes” of 2007. Needless to say, the review consists exclusively of eulogies proffered and paeans sung in praise of these “achievements”. The MoD is blithely unconcerned about the credibility and seriousness of such reviews. It is ostensibly positioning this review as an aide-mémoire for the lazy journalists and editors that abundantly populate the Indian media scene nowadays.

The substantial “achievements” of the ministry in 2007 are -

The successful launch of Interceptor Missile (AAD) towards developing a ballistic missile defence system, test flight of Agni-III (A3-02), user trial of Akash Missile by Army and Air Force, Handing over of first batch of land version of BrahMos missile systems to Army and successful conduct of 4thth Generation Fighter Aircraft, First meeting of Indo-German High Defence Committee, Meeting of the Indo-French High Committee Meeting and approval of Parliament to the Armed Forces Tribunal Bill were some other major events during the year. Military World Games were some of the significant events in the Ministry of Defence during the current year. The issue of Request for Proposal (RFP) for the purchase of 126 Medium Multi-Role Combat Aircraft for Indian Air Force, the arrival of first batch of two Hawk Advanced Jet Trainers from UK, Signing of the Agreement with Russia on the Joint Development of 5th Generation Fighter Aircraft, First meeting of Indo-German High Defence Committee, Meeting of the Indo-French High Committee Meeting and approval of Parliament to the Armed Forces Tribunal Bill were some other major events during the year.

A cursory look at some of the contentious issues that ought to have been covered in any objective and impartial review of the Indian defence scenario for 2007 -

  • Non-finalisation of LTPP, including for the 11th plan.
  • Slow rate of expenditure/ likely surrenders from the defence budget.
  • Personnel & HR issues concerning the three services.
    • Suicides & fragging incidents in the Army.
    • Continued shortage of talent for recruitment.
    • Large number of applicants for premature retirement and resignation.
    • Expectations from the Sixth pay commission.
  • Non-supply of Russian origin spares for military equipment.
  • The Gorshkov (non) deal.
  • Cancellation of the Eurocopter deal .
  • Status of Ayni airbase in Tajikistan.
  • Reduction/ Redeployment of Army in Kashmir.
  • Release of military frequency spectrum for civil wireless telephony.
  • Lack of infrastructure on Indo-China border.
  • MoD’s position on an Indo-Pak agreement on Siachen.

While on reviews, the Indian defence establishment might be heeding the advise of William Faulkner. Faulkner may have, however, said it in a different context.

The artist doesn’t have time to listen to the critics. The ones who want to be writers read the reviews, the ones who want to write don’t have the time to read reviews. [link]

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The fighting & the thinking man

Pragmatic received a very fascinating response [by email] to the post on The soldier and the scholar from some one who would be definitely slotted as an educated liberal in this country. Commenting on the statement in that post that “This country has a plethora of educated liberals who display at best, condescension, and at worst, a visceral dislike, for the military”, the erudite commentator posited-

There is a flipside. And that is awe and veneration. Both are extremes. I do not think their is a visceral dislike for the armyman but for the ethos of the military. Intellectualism, by its nature, abhors conflict that is not in the ‘mental’ domain. Also, the army represents a non--peace scenario even during peace-time.

If we stretch this argument further, there exists no reason for antagonism between the military and academia. They both deal with conflicts — soldiers with the “ugly” physical ones, and the academicians with the “suave” mental ones. The underlying principles of managing conflicts in the two domains are identical. That should constitute the soldier and the scholar as functional counterparts, operating in their exclusive domains.

The reality, however, dictates otherwise. The military and the intelligentsia in India are treading two disparate paths, that run parallel and never meet. There is a pressing need to build a bridge between the two; else the statement of the British General, William Francis Butler sounds foreboding-

The nation that will insist upon drawing a broad line of demarcation between the fighting man and the thinking man is liable to find its fighting done by fools and its thinking by cowards.

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