The Ministry of Finance has decided to allow the Ministry of Defence to transfer Rs. 7,870 crore from its capital account to its revenue account to take care of its additional requirements.
The decision has come at a time when the Ministry of Defence was encountering financial constraint due to increased spending on account of fuel price hikes. The money would now be utilised for meeting the revenue requirement of the Ministry.
Sources in Ministry of Defence said out of the allocation of Rs. 86,740.71 crore for its capital expenditure, it had managed to spend only about 82 per cent on the head. Since the requirement for Revenue Expenditure was more, it was decided by the MoF to allow MoD to transfer Rs. 7870 crore to meet its requirements.
It is pertinent to note that in the Defence budget 2013-14 a sum of Rs. 203,672.12 crore was allocated of which Rs. 116,931.41 crore was for revenue expenditure and Rs. 86,740.71 crore for capital expenditure.
Since the Indian armed forces are in the middle of a major modernisation process, under the Capital account Rs. 13,327.04 crore had been allocated for the Army, Rs. 23,478.78 crore for the Navy and Rs. 37,048.06 crore for the Air Force. However, during the financial year the three forces have not got the clearances for several of the projects that were expected to get the Ministry of Defence nod and therefore the capital expenditure had not been fully utilised. It was thus decided to use a part of the unspent allocation for meeting the growing revenue requirements, including payment of salaries.