February 8, 2008 ☼ army ☼ defence ☼ Economy ☼ education ☼ India ☼ labour market ☼ liberalisation ☼ military ☼ Mint ☼ national security ☼ op-ed ☼ Public Policy ☼ Security ☼ skills
This is an archived blog post from The Acorn.
In our op-ed in Mint, Sushant Singh and I argue that the shortage of officers in the armed forces is not an anomaly, and merely raising take-home salaries isn’t going to solve the problem. First, India needs a capital-intensive army and must allocate more resources to military modernisation. Second, the armed forces need to deepen their officer training programmes and build what they can’t readymade. Ultimately, India needs to increase the supply of employable graduates—for that, setting education free from government control is a must.
Talented graduates are increasingly scarce and the search for ‘officer-like’ qualities will be increasingly futile. It’s time for other, harder strategies
What does the Indian Army have in common with the National Association of Software and Services Companies (Nasscom), the Confederation of Indian Industry (CII) and the National Manufacturing Competitiveness Council? Answer: They are all complaining of a shortage of employable graduates. The army is short of more than 11,000 officers. In 2005, a Nasscom-McKinsey report projected that the IT industry would face a potential shortage of 500,000 people by 2010.
The army may be looking for young people with “officer-like qualities”, while the private sector is looking for people of “management calibre”, but they are essentially fishing in the same pond. India produces three million graduates each year. But as Satyam’s B. Ramalinga Raju noted, “most of these are uncut diamonds that have to go through polishing factories, as the trade requires only polished stones”.
It is more than a coincidence that the Armed Forces were unable to fill available seats at the Indian Military Academy since the early 1990s—just after the P.V. Narasimha Rao government’s reforms dismantled the licence raj. Steady economic growth over the last two decades and the emergence of globally competitive IT, financial and manufacturing industries has increased the opportunity costs of joining the Armed Forces. Furthermore, productivity growth in these sectors is increasing wages: A young Indian will have to give up even more to join the Armed Forces, which offer relatively lower take-home salaries.
It is tempting to believe that merely raising military pay will address the issue of officer “shortages”. To do so would be to ignore the fundamental changes to the relative abundance of capital and labour in India’s growing economy. As labour—especially managerial talent—becomes relatively less abundant, industries, including the Armed Forces, must become more capital-intensive. This is already happening in the automobile manufacturing sector. Indeed, should the long-awaited labour reforms come about and mass manufacturing take off, the army is likely to develop a shortage in the lower ranks, too.
Manpower shortages are not an anomaly—they are part and parcel of India’s transition into a middle-income country. The Armed Forces should prepare for the changed circumstances by implementing structural reforms.
First, in the near term, the Armed Forces, especially the army, should invest more in modern equipment and weapon systems while cutting down the headcount. Today, the army spends most of its money on salaries and operational expenses. About 26% of the army’s budget is capital expenditure. Only 10% of the budget goes into modernization. This ratio must improve to enable the army to take advantage of 21st century technology.
Now, it is true that India needs a large army to hold territory and to carry out counter-insurgency warfare. It is also true the vision of a high-tech army has taken a beating due to the failings of Donald Rumsfeld’s Pentagon. But India is spending way too little, compared?with China (leave alone rich Western countries), on military modernization. If the army’s capabilities are to match India’s growing economic strength in the coming decades, it is imperative that it adopt a more sophisticated technological posture.
A more capital-intensive army does not necessarily mean one that imports big ticket items. Rather, it is one that invests in technology to improve force projection at all levels: from better body armour and munitions for the soldier to highly networked formations and integrated command and control. Beyond merely improving the “teeth-to-tail” ratio, the Armed Forces must fundamentally re-examine what it is that constitutes teeth.
There have been a slew of defence procurement scandals in the wake of the Bofors controversy. But the real scandal, and an insidious one at that, is the defence procurement policy. It has become so Byzantine that the Armed Forces routinely spend less than their allocation: sometimes surrendering as much as 10% of the defence budget.
Second, India’s experience in the Kargil war laid bare the need for the Armed Forces to operate in an integrated manner. Furthermore, India’s nuclear doctrine calls for a force based on a triad—with land, sea and air components that need to be part of the composite strategic deterrent. Yet, there has been little progress into moving beyond mere operational “jointness” to integrated military commands that comprise the land, sea and air components.
Current and future operational imperatives suggest India can no longer afford the luxury of sticking to that tradition. Economic realities, combining resources to optimize the overall teeth-to-tail ratios, only reinforce this point. Such a radical restructuring will be the most ambitious exercise ever. But if India is to meet the security challenges of this century, there is no choice.
Will all this succeed in the Armed Forces attracting sufficient number of young people to a military career? Not unless the manner in which the forces identify, train and manage human resources is overhauled. The Armed Forces no longer have access to low hanging fruit, as good graduates are sought after globally. That suggests that the Armed Forces will have to emulate the big IT companies and set up their own training academies—take the relatively rougher diamonds and polish them in-house. In other words, instead of trying to look for people with “officer-like qualities”, the Armed Forces will need to create them.
Among the shocking features of the defence human resources policy?is?the presence of an exit barrier—officers cannot simply resign from the services after giving due notice. Their request for termination has to be approved by the government. While this policy has long been justified on ostensible national security grounds, it ignores the fact that an exit barrier is?also?an?entry?barrier.?At?the?mar-gin, potential recruits are likely to shy away from signing up because of the risk of being trapped in an unhappy job. This exit barrier has to go: a reasonably long notice period should substitute “the pleasure of the president”.
The roots of these shortages can ultimately be tracked down to India’s dysfunctional education system. Raghuram Rajan and Arvind Subramanian of the International Monetary Fund have pointed out that the solution to the “Bangalore Bug”—India’s equivalent of the Dutch disease that emasculates skilled labour supply in the wider economy—is to “redress the past neglect of primary and secondary education”. They advise the government to free education from its clutches.
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