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Considering the overall economic situation, the Finance Minister P Chidambaram has allocated to the Defence sector Rs 203,672 crore in 2013-14 Budget with a promise to provide any additional funds required for national security.
Welcoming the allocation, Defence Minister AK Antony told mediapersons, "Taking into account the difficult economic situation both at home and abroad, the finance minister has done a good job. The measures that he has outlined for the rejuvenation of the economy while ensuring inclusive growth are indeed commendable."
The Defence budget allocation accounts for 12.23% (approx) of the total Central Government expenditure for the year 2013-14. The allocation of Rs 2,03,672 crore represents a growth of 5.31% over Budget Estimates of Rs1,93,407 crore for the financial year 2012-13 and 14.10% growth over the Revised Estimates of Rs.1,78,504 crore for the same year.
Out of Rs 2,03,672 crore allocated for the financial year 2013-14, Rs 1,16,931 crore has been allocated for Revenue (Net) expenditure and Rs 86,741 crores for capital expenditure, which includes modernisation related expenditure. This represents a growth of 2.73% and 9.00% respectively over the Revenue and Capital allocation in BE 2012-13. The Defence outlay constitutes 1.79% of the GDP (esimated to be Rs113,71,886 crore). India has been spending less than 2 % of its GDP on national defence for quite some time. This year's budget has reduced the allocations further from 1.82 %to 1.73% of its GDP.
Security experts like Deba Mohanty, Chairman and CEO, INDICIA Research & Advisory opine, "Given the larger macro-economic conditions, resources allocated for national defence seem reasonable, although not satisfactory. Armed forces are indirectly told, through the budget, to prune their figure further to be more lean and mean in order to accommodate more stealth, fire power, gadgets and mobility. This becomes evident in allocations for stagnant revenue and fat capital budgets."
Neelu Khatri, head of Defence and Security Advisory – KPMG in India says, “The subdued increase of 5.3% in the defence budget as compared to the last year’s double digit increase will lead to the MoD in rationalizing procurements in a timely and effective manner. The government will also need to re-examine the defense procurement systems to remove redundancies so that our forces are able to get the desired equipment in a timely fashion.”
The MoD is in a major modernisation process with several acquisitions in the pipeline besides upgradation of infrastructure in the northeast along with China border. Among the