Budget 2021

Defence sector gets marginal hike in Budget allocation

Akash Weapon System of 27 Air Defence Regiment   | Photo Credit: R.V. Moorthy

Allocation for defence increased by 5.6% in the Union Budget 2017–18.

Finance Minister Arun Jaitley allocated ₹2,74,114 crore for defence which represents a 5.6% increase over the revised estimates of the present year. Defence pension is not part of this allocation.

This accounts for 12.77% of the total allocation of the central government expenditure of ₹21,46,735 crore for 2017–18.

Of this, ₹1,82,534.42 crore is for revenue expenditure and ₹ 91.579.7 crore apital expenditure. Of the capital allocation, meant for new purchases, the services get ₹86,488 crore, a 10% hike from this year’s allocation of ₹78,586.68 crore.

The Budget allocation for last year was ₹2,58,589.32 crore which was revised to ₹2,59,480.13 crore. The capital allocation for the defence services this year was ₹78,587 crore of which ₹71,700 crore had been spent by the ministry leaveing ₹6,886 crore unspent.

Adding pensions to the allocation, the Indian defence spend for 2017-18 would be ₹3,59,854 crore. It is 5.5% more than the budget allocation for this year and 4.2% more compared to the revised estimate for 2016-17.

The amount earmarked for pensions is ₹85,740 crore. With One Rank One Pension (OROP) having been implemented last year and a separate allocation made for the arrears, the pension has remained largely same as that of last year.

Interactive system

Mr. Jaitley addressed some of the long-standing concerns of the armed forces in his speech. He announced a comprehensive web- based interactive pension disbursement system for defence pensioners as well as a centralised defence travel system for the personnel to book train tickets online.

“A centralised defence travel system has now been developed through which travel tickets can be booked online by our soldiers and officers.

“They do not have to face the hassle of standing in queues with railway warrants,” he observed, in a major relief to personnel who travel frequently.

On the pension disbursement system, Mr. Jaitley said that the system to be established will receive pension proposals and make payments centrally.

‘Inadequate allocation’

However, experts said the higher allocation was inadequate given the high value procurements in the pipeline and the seventh pay commission recommendations which were yet to be implemented.

Brig.Gurmeet Kanwal (Retd), Distinguished Fellow at the Institute for Defence Studies and Analyses (IDSA) said that the nominal increase in the defence budget was barely adequate to allow for domestic inflation.

“It is insufficient to cater for the increase in pay and allowances due to the implementation of the award of the Seventh Pay Commission. As this expenditure will add to the revenue budget, there will be a consequent decrease in the capital budget, leading to further stagnation in military modernisation,” he observed.

Last year India had signed a €7.87 billion deal with France for 36 Rafale fighter jets and $731 million deal with BAE Systems for 145 M777 Howitzers among others.

In addition, the Defence Acquisition Council (DAC), the apex body of the defence ministry on procurements, had cleared procurement proposals to the tune of more than ₹1 lakh crore.

Brig.Kanwal also stated that the nominal increase does not allow for the annual inflation in defence equipment procured from abroad which is 12-15% and the drop in the value of the rupee against the U.S. dollar.

“Overall, defence preparedness will deteriorate further even as the threats and challenges are continuing to increase,” he added.

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Printable version | Feb 27, 2021 10:03:22 AM | https://www.thehindu.com/business/budget/Defence-sector-gets-marginal-hike-in-Budget-allocation/article17127942.ece

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