With the formation of the new NDA coalition Government after the recent General Elections, the ‘Agnipath’ discourse has been bought back into the forefront by the coalition allies, now with the BJP having lost its majority.1
The reason for the pressure is simple, there has been widespread discontent with this ‘scheme’. It traps young people into four year contract where they have to face military conditions after which only 25% are permanently recruited.
It is a very obvious scam, the neoliberals would argue that the military isn’t a ‘job guarantee scheme’. Ok, where is the job guarantee scheme? I don’t see any job guarantee scheme for urban India. For many people, a Government job of any kind is a way out of poverty. But for others, being serving the country is a source of pride that increases their social standing. It is a tradition for many youths in smaller towns and villages.2
Due to the Agneepath scheme, the boys here are now looking for other options. What is the use of working for only four years?
Those are very valuable four years of your life. Remember, the age limit of Agnipath scheme is 17.5-21 years3. You have options other than the military; go to college, study for a Government job where you don’t waste away four precious years and get a good guaranteed salary until retirement. It makes serving in the military inherently less appealing.
Once you are out of this scheme, which 75% will be, you will have to find a job. Where will you find a decent paying job in rural India? Heck, even urban India has a unemployment/underemployment problem.4 You are also under social pressure to be married. Since we live in a patriarchal society, men are expected to be the money makers; who wants to marry a man who doesn’t have a job?5 The article cited goes through all of it.
Bullshit economics used to justify the scam
What I really wanted to talk about isn’t really about why Agniveer is a scam from an individual’s perspective. I want to talk about the economic justifications trot out regarding this scheme.
The alleged reason for introduction of this scheme is to reduce the pension ‘burden’.6 I would argue anyone who risks their lives for their countries deserves pensions (everyone deserves pensions but that’s whole another discussion).
While not explicitly stated by the Indian government’s press releases, it is widely understood that the scheme has several additional unspoken goals. The first and foremost is financial. By some estimates, India currently spends at least as much on military pensions as it does on the salaries of currently serving personnel. However, limiting required service to four years and excluding a significant percent of personnel, by requiring them to leave service before earning benefits, will dramatically reduce the cost of pensions in the defense budget. While the wage of an Agniveer is currently about 5,000 rupees per month more than regular personnel, they are only on the books for four years and ineligible for service pensions, representing major savings in the long run.
The Diplomat
First of all, this is such an insult to anyone who wants to serve in the military, calling their service a ‘burden’ for the country. Secondly, India is a sovereign state that issues its own currency. There are no real financial limits on how much it can spend on military, only real resource limits.
The Indian Government doesn’t save anything by not spending, it is not a household, it always has the capacity to create money if it wanted to. It isn’t revenue constrained like the non-Government sector (households, businesses). In fact, by ‘saving’ money denying people pensions, the Government is taking money away from the non-Government sector. A Government ‘saving’ is a dis-saving for the non-Government.
The term ‘Government saving’ is therefore nonsense, Sovereign Governments unlike households has neither more nor less to spend by not spending at present. The Government is the one which creates the money in the first place!
Even besides this, the idea that retried army members are a ‘pension burden’ is complete nonsense . Why? As India has low aggregate demand with vast labour and resource under-utilization thanks to neoliberal policies, any increase in spending of any kind increases total output through multiplier effects. The pensioners get paid, they spend their pension of goods and services which creates jobs etc. There is no threat of inflation so long as real resources are available.
Even if India were at full employment. There would still be no justification for this scheme. Demand could be reduced through alternate ways like higher taxes, lower discretionary spending (which pensions are NOT one), rationing etc.
People can see that Agnipath is a scam, the unemployment/underemployment issue is one of the major reasons why the BJP lost its majority in the recent elections. The branding and PR surrounding the scheme when it replaced the old recruitment scheme made it sound like Agnipath is better because you get paid ₹11.71 lac after 4 years. That amount is nothing compared to what you lose by not being recruited.
There are other nonsense arguments neoliberals like to bring out “But what about balance of payments?”. Yes, a squeeze on the Balance of Payments can be very difficult for a country to adjust to but that is no excuse to not increase domestic spending. Why? Because the only way out of import dependency is with increased domestic spending. India must spend on renewable energy, it must not rely on the Private Sector to do it.
And one must also remember that there is no reason for the Current Account Deficit to rise when fiscal deficits rise. It depends on how much of the increased spending goes towards imports, exchange rates and how much others (i.e., RoW) are willing to accept Indian Rupees. This is why, in most cases, you can’t see a clear link between the Current Account Balance and the Government Budget Balance.
As for capital flight, India must strengthen capital controls and ensure that illegal capital outflows are dealt with punitively. The most responsible for this is not the working class, or even the ‘middle’ class but the big capitalists who use various tricks to illegally obtain forex and create leakages in domestic demand.7
What is to be done?
Agnipath scheme must be scrapped entirely. There have been talks of ‘changes’ to the scheme, I believe that even a ‘changed’ scheme will still be a way to reduce ‘costs’ on pensions which as I stated previously is ridiculous.
If the pensions are eating into the ability to purchase defense equipment or whatever, expand domestic military production using state owned companies. Private companies must not be let into the defense industry. Do not waste foreign exchange on overpriced western made equipment. Its pretty obvious why they prefer western equipment, I’m not going to mention it here.
And if it’s still not enough, increase the military budget to whatever is needed to purchase the equipment the country needs. As mentioned previously, so long as there are real resources available, there won’t be any inflation arising because of this.
Every worker deserves pensions so that they can live a dignified retired life. There is no excuse that can be made to deny them that. Especially the excuses built on junk economics.
- https://www.thenewsminute.com/news/agnipath-scheme-under-review-after-nda-allies-raise-concerns ↩︎
- https://thewire.in/government/gahmari-village-had-a-thriving-army-culture-but-not-after-the-agneepath-scheme ↩︎
- https://joinindianarmy.nic.in/writereaddata/Portal/Notification/859_1_ELIGIBILITY_CRITERIA_FOR_RECRUITMENT_AS_AGNIVEER.PDF ↩︎
- https://www.downtoearth.org.in/news/governance/42-indian-graduates-under-25-unemployed-report-91898 ↩︎
- https://thewire.in/society/chambal-agniveers-blacksmiths-carpenters-shopkeepers ↩︎
- https://thediplomat.com/2022/07/indias-agnipath-scheme-solution-or-time-bomb/ ↩︎
- https://www.indiatoday.in/law/story/adani-essel-coal-import-delhi-high-court-cbi-investigation-dri-revenue-intelligence-2477969-2023-12-19 ↩︎