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  1. Defence Union Budget 2017 may see less allocation in defence sector due to high man-power cost, says expert

Defence Union Budget 2017 may see less allocation in defence sector due to high man-power cost, says expert

As the budget of the financial year 2017-2018 will be presented today, all eyes would be on how the defence sector would be treated this time.

By: | New Delhi | Published: February 1, 2017 12:23 PM
terror-l-pti “The government has allocated around Rs. 70,000 crores for the capital procurement, which in fact is less than compared to the previous year. (PTI)

As the budget of the financial year 2017-2018 will be presented today, all eyes would be on how the defence sector would be treated this time. But, it is already known that this year’s allocation for capital procurement is less than last year. Defence expert S B Laxman, feels the reason for this is the increasing cost of man-power.

“The government has allocated around Rs. 70,000 crores for the capital procurement, which in fact is less than compared to the previous year. The reason being the rising cost of the man-power and it has come at the cost of the modernization,” Laxman told ANI. “Among the three forces, Air Force accounts for 40 percent of the total procurement budget. Then, it’s the Army which covers 30 percent roughly.

Since the government has signed the Rafael deal, Air Force will remain the pre-dominant force taking the biggest share in the procurement budget. Navy will also increase its share,” he added. The defence expert believes that army has some share of concerns. “Somehow they are not able to buy their equipments at the right time. So there are some structural issues in the army which they need to sort out.

Army’s modernisation is not in a very good health.” “Defence budget, is one, in which the government spends a substantial amount of money. In fact, thirteen percent of the total central government expenditure is incorporated under defence. It is primarily goes to three armed forces, the army, the navy and the air force. Some part of it goes to DRDO and other production agencies like DGQA.”

Talking about the changes which he has witnessed in the last few years, Laxman said, “Over the years the main change I have been seeing is the skewed nature of allocation. The man-power cost has increased substantially, if you compare today’s budget with the 2007-2008 budget, it has jumped from 25-26 percent to 45 percent. So there is almost 20 percent increase in the man-power cost.”

“That increase in the man-power cost is primarily at the modernization and the sustenance expenditure, which has also gone down by 19-20 percent. This is not a healthy situation for the defence of the country. Good allocation is required overall, in the defence. But the government also needs to focus to keep a check on the high man-power cost, so more-more resources can be freed for the modernisation and sustenance,” he added Talking about the expectations from this year’s Union Budget, the defence expert said, ““I am not so hopeful because the economy is not in a great shape. In the present financial year, the GDP growth is down to 7.1 percent and people fear that it can go further down also.” “And as for the budget that will be given this time, I am not expecting a GDP growth of more than 7 or 7.5 percent and when the growth comes down than 8 percent, the defence sector is not given priority. So I am not expecting a huge growth, I will be happy if the budget grows at ten percent.” He also asserted that the ‘Make

In India’ initiative has rejuvenated the Indian defence industry, particularly the private sector. “A lot of decisions have been taken under the make in India regime. Be it simplification of industrial licensing, the liberal licensing of FDI or coming out with the fast ever defence policy. So things have moved in the policy sector. But there are some concerns because the procurement projects are not moving forward at a decent pace,” he said.

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“However, no major contract has been given to the private sector, even though their expectation for make in India is very high. So the government should look on how to extradite the procurement projects so that the contracts can be awarded to the country in the shortest time possible,” he added.

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