The Indian Army is estimated to spend more on pensions than salaries in FY21. Pensions and salaries together form about 76% of the Army’s budget. Such a high wage bill leaves little for the Army to spend on upgradation of equipments and weaponry.
A slow-paced growth of the modernisation budget meant that only 8% of the Army’s equipments were state-of-the-art as of 2018.
Wage bill
The share of pensions in the defence budget increased to 28.4% in FY21 from 20.5% in FY16. The share of salaries, the biggest component of defence expenditure, has see-sawed over the years. The graph traces the share of pensions and salaries in the defence budget .
Salaries vs Pensions
Share of pension
The table lists the share of various components in the FY21 budget for all the three armed forces. For instance, 38.1% of the Army’s FY21 budget was allocated for pensions. The significant wage bill meant that only about 9% was set aside for modernisation of the Army.
Breaking down the Defence Budget
Slow pace
The expenditure on modernisation of the Army has grown at an annual average rate of 8% between 2010-11 and 2020-21. The graph shows the Army’s modernisation expenditure in ₹ crore.
Army's modernisation expenditure
Age distribution of weapons
Close to 70% of the Army’s equipments and weapons are “vintage”, while the Standing Committee on Defence (2018) recommended that only 33.3% should belong to that category.
Vintage, current or state-of-the-art?
Source: PRS Legislative Research.
