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Defence allocation for 2022-23: Views of experts and industry

In his view, “As has become the norm, defence pensions account for almost 23 percent of the total defence budget.”

The finance minister has been liberal in allocating 2, 33, 000 crore for revenue expenditure of the services which is app 9.89 percent more than the current year’s allocation.”
The finance minister has been liberal in allocating 2, 33, 000 crore for revenue expenditure of the services which is app 9.89 percent more than the current year’s allocation.”

At Rs 5, 25,166 core, the total defence budget for the next fiscal is 9.82 percent more than the budget allocation for the current financial year.

“This is considerably better than the corresponding increase of less than 1.5 percent last year,” opines Amit Cowshish, Former Financial Advisor (Acquisition), Ministry of Defence.

For the Services, it is a mixed bag

Explaining the budgetary allocations for the defence at first glance, Mr Cowshish says, “Though it works out to 2.04 percent of the estimated GDP for FY 23, which is less than last year’s percentage of 2.15 percent, the share of defence budget in the central government expenditure has increased from 13.73 percent last year to 17.83 percent.

The capital budget has been increased by app 12.82 percent which is considerably lower than the 18.75 percent increase last year. In absolute terms, however, allocation of 1, 52,370 crore, of which 68 percent is earmarked for procurement from the local sources, should gladden the heart of the Indian industry.

The finance minister has been liberal in allocating 2, 33, 000 crore for revenue expenditure of the services which is app 9.89 percent more than the current year’s allocation.”

In his view, “As has become the norm, defence pensions account for almost 23 percent of the total defence budget.”

“The finance minister announced that defence R&D will be opened up for industry, start-ups and academia with 25 per cent of defence R&D budget being earmarked for them. Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with DRDO and other organizations through Special Purpose Vehicle model and an independent nodal umbrella body will be set up for meeting wide ranging testing and certification requirements, “opines Mr Cowshish.

View of an Indian Army Veteran

Sharing his first thoughts with Financial Express Online, Lt Gen P R Shankar (Retd.), former Director General of Artillery, says, “The budget presented today is welcome in the larger context of rising India. It is strong on announcements to boost growth through infrastructure and capex across all sectors. However, the proof of the pudding will be in its execution. As has been the recent trend, defense allocation was not announced. It leads one to conclude that defense allocation will remain around 1.5 percent of GDP or thereabouts. There were two direct proposals related to defense.”

“The first was that 68 per cent of capital acquisition will be from indigenous sources to boost Atmanirbharta. This is marginally greater than last year and a step in the right direction. The second announcement that defense R&D will be opened to private players, startups, and academia beyond the DRDO is a welcome one. The DRDO had become a firewall in development of cutting-edge technology. This policy will lead to getting hold of cutting-edge technology into the military and will also reduce imports, if operationalized properly,” Gen P R Shankar, currently a Professor in the Aerospace Department of IIT Madras.

In his opinion, “The budget announcements regarding infrastructure, improvement in logistics, Parvatmala, border village development, boosting the startup ecosystem and the ‘Droneshakti’ program will have indirect second order effects on defense. Improvement in roads and railways, logistics, digitalization, and communications in mountains (as part of Parvatmala) will improve our mobilization and logistics capabilities. The border village development scheme will reinforce the integrity of all areas under our control. It will prevent China from using ‘lawfare’ to lay claim on villages on our side of the Line of Actual Control (LAC). The ‘Droneshakti’ program and the startup ecosystem proposals offer tremendous opportunities to the Armed Forces to leverage them for military use. A well thought out action plan should see disruptive technologies being harnessed through this route provided the military is able to do so.  Also, the Production Linked Incentive (PLI) Scheme and the push towards green energy will also assist the armed forces if leveraged.”

View from Private Sector

Vice Adm Paras Nath (Retd.), Group President, Crown Group of companies (Defence Engineering Division), has hailed the budget for FY 2022-23 and termed the setting aside of R&D budget for the start-ups, academia and industry as a positive move, “as it will help start-ups and MSMEs to have their in-house R&D.”

To make India AtmaNirbhar in Defence manufacturing, Vice Adm Nath has suggested a minimum of 5 years as gestation period for the R&D support which is being provided to the industry and start-ups.

Also, according to him, in line with the GOCO (Government Owned and Company Operated) policy, directive to the PSUs to offer existing facilities with spare capacities to the industry is needed.

Cdr Syed Qais Hayat (R), President Strategy & Operations, ARTPARK (AI & Robotics Technology Park) too welcomed setting aside 68 percent in the FY 2022-23 Budget for domestic equipment. This, according to him, is in line with the government’s approach to restrict import of capital assets in all cases, especially when the domestic industry can create not only products but also solutions.

“Import of Capital assets for the defence sector will be resorted mainly in those cases which necessitate urgent procurements (generally self-defence) and in-house development of matching technology is unlikely in near to mid-term,” Cdr Syed Qais Hayat says.

According to him, the Defence Ministry, related departments and Services will have a larger than ever onus to carry out a thorough environment scan of in-house capabilities in defence production. “And, to identify, support and induct technologies, equipment and platforms to be able to justify any capital imports.” 

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