Higher pay pushes up defence outlay

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Special Correspondent

Increase of about Rs. 14,000 crore in outlay for new defence equipment

NEW DELHI: The interim budget on Monday proposed an increased outlay of about Rs. 27,000 crore for defence as against the revised estimates of Rs. 1,14,600 crore during the current fiscal.

However, over half the increase is on the revenue account for pensions, higher salaries for armed forces personnel and civilians and enhanced allocation for stores and works.

On the capital account — outlay for new defence equipment — the increase is of about Rs. 14,000 crore or about 33 per cent. But, this compensates for an unutilised Rs. 7,000 crore this year. Thus the actual increase is about Rs. 7,000 crore compared to the revised estimates. The government has proposed Rs. 1,524 crore more on the construction account for the army while the air force gets an additional Rs. 300 crore for upgrading its airfields. In the aircraft and aero engines account, three services will get Rs. 1,200 crore more with half being accounted for by the army and the rest divided between the other two services.

The army will receive an additional Rs. 5,000 crore for artillery, missiles and air defence systems despite its inability to spend about Rs. 2,000 crore during the current fiscal. This head sees the navy back to the previous budgetary level while the IAF will get Rs. 1,370 crore over the revised estimates although it could not spend Rs. 1,100 crore this year.

The outlay for navy will go up by Rs. 2,840 crore. This is more because of its inability to spend over Rs. 3,000 crore this year. A massive modernisation plan for ordnance factories is on the cards as is evident from a four-time increase proposed for the next fiscal. The allocation on the R & D account for the three services will go up by over Rs. 600 crore to Rs. 3,723.87 crore.

On the revenue account, part of the increase is for the Coast Guard in the wake of the Mumbai terror attacks. This year, the Coast Guard could not spend about Rs. 250 crore but the government has more than doubled the outlay for new vessels and aircraft to Rs. 1,300 crore.

There are huge increases in the revised estimates of the revenue account compared to the budgetary estimates for the current fiscal. On the pension account itself, there was an additional expenditure of about Rs. 4,700 crore. And for the next year there will be a further increase of Rs. 1,557 crore. In the case of the army, this increase is even larger at nearly Rs. 10,500 crore accounting for one-third of the total additional outlay for next year.

For the navy the increase is at Rs. 300 crore due to higher pay for civilians and expenditure on stores. But, repairs and refits see a sharp drop as compared to this year’s budgetary estimates but register a slight increase compared to the revised estimates.

For the Indian Air Force, the revenue expenditure has increased by over Rs. 2,200 crore. Almost half is due to the Sixth Pay Panel’s recommendations. The ongoing upgradation programme for its air assets has led to an increase of Rs. 1,100 crore on the stores account. In the case of defence ordnance factories, there is a higher accent on manufacturing and the government expects the three service to additional ammunition and weapons worth about Rs. 2,000 crore from them.

The Defence Research & Development Organisation too gets an increase in allocations but almost one-third is due to higher salaries. The rest is accounted for in the form of stepped up outlays for R & D (over Rs. 200 crore) and stores (about Rs. 335 crore).

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