Budget 2018: The Union Budget proposed an allocation of Rs 2.95 lakh crore for the Ministry of Defence, translating into an increase of 7.81 percent as compared to the allocation for the previous financial year. This figure of Rs 2.95 lakh crore does not include the budget for defence pensions. Notably, the proposed allocation for defence amounts to the lowest share of the country’s GDP that it has received since the 1962 India-China war.
The figure of Rs 2.95 lakh crore amounts to 1.58 percent of India’s Gross Domestic Product. This is the lowest share of allocation to the MoD since 1962 when the budget stood at 1.5 percent of the GDP, which was raised to 2.31 percent in the subsequent fiscal year. Another first in this budget is that India will be spending more on pensions than it will on capital expenditure.
Of the Rs. 2.95 lakh crore proposed as the allocation for the defence sector includes a capital outlay of Rs 99,563.86 crore which will be used for new weapon systems and modernisation. On the other hand, Rs 1,95,947.55 crore has been allocated for revenue expenditure, which includes running costs, salaries etc.. The defence budget does not include Rs 1,08,853 crore separately allocated for defence pensions.
The Union Budget presented by Finance Minister Jaitley did mention that ensuring adequate budgetary support to the defence sector will be the government’s priority. In his budget speech, Jaitley said that a lot of emphases has been provided to modernising and enhancing the operational capability of the Defence Forces over the last three and a half years. The FM also lauded the “stellar role” of the armed forces in meeting the challenges on the country‟s borders as well as in managing the internal security environment both in Jammu and Kashmir and the North East. “I would like to place on record our appreciation for the efforts and the sacrifices made by the three services in defending the interests of the nation,” he added.
However, the minuscule outlay for the defence budget could deal a body blow to India’s grand plans of military modernisation and maintenance in the face of the collective threat from Pakistan and China. The capital outlay of Rs 99,563.86 crore for military modernisation and procurement of new weapon systems is insufficient when compared to the Rs 26.84 lakh crore that the armed forces had sought over a period of five years on this count.
That the armed forces are grappling with Soviet-era aircraft and obsolete and ageing weapons has been no secret. The Indian Army has outlined infantry modernisation as one of its top priorities. Experts said the defence budget allocation was insufficient to meet the demands for the modernisation of armed forces, especially in view of the twin threats of China and Pakistan. Dr Laxman Behera of Institute of Defence Studies and Analysis said the expectation from the government was much higher. Agreed Brig (retd) S K Chatterjee, who believes that the allocation of resources to the armed forces in the budget did not match the security challenges that India faces along the western and northern borders. Flagging the inflationary pressure and increase in the cost of military hardware compared to the previous year, the actual hike was marginal at best, reported PTI.
In his budget speech in Parliament today, Jaitley highlighted the measures taken to develop and nurture intrinsic defence production capability to make India self-reliant for meeting its defence needs. The Finance Minister also pointed out that the government had opened up defence production to private investment as well as for foreign direct investment. Jaitley said the government would take measures to develop two defence industrial production corridors in the country that shall include developing an industry-friendly Defence Production Policy 2018. This, he said will encourage domestic production by the public and private sectors as well as MSMEs.