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  • In 5 charts: Why India needs Agnipath for military modernisation

In 5 charts: Why India needs Agnipath for military modernisation

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NEW DELHI: Last week, the Centre launched the radical and far-reaching Agnipath recruitment model with an aim to make the country's military leaner, fitter and more youthful.
Despite the announcement sparking protests in multiple states, the government stood in staunch defence of the scheme, asserting that it will lead to long-term benefits for the military.
The subtext being that the scheme will eventually reduce the ballooning salary and pension bills of the military, thereby leaving a large sum of money for the modernisation of armed forces.
But just how much is India spending to maintain its military manpower and take care of defence pensioners. Here's a look ...

The central government foots a hefty bill for lakhs of veterans and defence civilians, whose pensions last year exceeded the amount disbursed to serving personnel.
In the budget estimate for FY22, the salaries and pensions of the forces make up over 54% of the total defence budget.
On the other hand, capital outlay accounts for 27% of the budget. This is the amount that is spent on procurement of new weapons and technologies for the forces.
And since a major chunk of the budget is allocated to the Army, its share of pensions and salaries is also the highest at 86% and 79% respectively.
budget

A close look at the defence budget over the years shows that while the capital outlay as percentage of the total budget has declined in the last 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 defence budget (see graph), which fell to 22% in 2018-19 (the lowest), and recovered to 27% (in 2020-21). This recovery was due to the additional spending of Rs 20,000 crore on naval fleet, aircraft, and other equipment for Navy and Air Force.
Read more about Agnipath on TOI+

Conversely, India's expenditure on defence pensions has grown at an average annual rate of 12% in the last 10 years (see graph above). This is higher than the average annual growth rate of the defence budget (8.4%).
The share of pension in the defence budget has increased from 18% to 26% (in 2019-20), before declining to 24%.
The increase in the share of pension can in large part be attributed to the One Rank One Pension (OROP) scheme implemented in 2015. Under this, all defence personnel retiring at the same rank are entitled to uniform 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 Agnipath.
Ranade noted that due to the rise in pension and salary burden, the capital spending on modernisation has declined by as much as 8 percentage points in the last decade.

This is where the Agnipath model comes into play.
The scheme will not only cut the average age of the forces from 32 to 26, but will also lead to lower burden on the exchequer as 75% of the troops, or 'Agniveers', will be demobilised after their four-year stint.
In the first year (2022), the Centre aims to hire 46,000 Agniveers, of whom 34,000 will leave the service in 2026 with an exit package of Rs 11.71 lakh. By 2032, the Army is planning to have regular soldiers and Agniveers in a 50:50 ratio.

In 2020, the Army had submitted a rough calculation of how much money can be saved by trimming the manpower through a draft proposal.
At that time, it had proposed a three-year service model as opposed to the current four-year model.
As per the proposal, the comparison of cost incurred by the government for a "Sepoy with 17 years Terms of Engagement as compared to (Tour of Duty) Sepoy with 3 years service, shows that the prospective lifetime savings for just one Sepoy is Rs 11.5 (crore). Thus savings for only 1,000 jawans could be Rs 11,000 crore which could then be utilised for the much needed modernisation of Indian armed forces"


India vs others
In 2020, the Institute for Defence Studies and Analyses (IDSA) did a comparative study of defence pensions in India, UK and US.
The study found that unlike in India, where normally 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 said that nearly 80 per cent of the service personnel in US retire without a pension.
In both US and UK, the retirees are compensated with lump sum payments or employment in the government and non-government sectors. This is similar to what Agnipath envisions.
But thus far, when it comes to salaries and pensions, India has to set aside a larger proportion of its budget compared to other nations.

In a separate study, IDSA analysed the military manpower costs of India and US. According to the analysis, India spent nearly 26% of its budget in 2020 on pensions compared to America's 9%.
According to other sources, 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 forces behind China and ahead of US.

However, it has far fewer naval vessels and aircraft when compared to the other two countries.
Moreover, US and China are looking to cut down the strength of their military to focus more on Navy, Air Force and technological advancements.
With Agnipath, India is hoping to achieve similar objectives — make its armed forces leaner & youthful and augment its technological prowess to meet futuristic challenges.
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