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2-min read

0.01% - The Increase in Defence Allocation From Interim Budget as Modernisation Put on Hold

Out of the total allocation, Rs 3,05,296 crore ($44.6 billion) have been earmarked for Defence Expenditure (the actual defence budget), while the rest is civil expenditure which includes pensions and miscellaneous expenses.

Fazil Khan | News18.com

Updated:July 5, 2019, 3:53 PM IST
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0.01% - The Increase in Defence Allocation From Interim Budget as Modernisation Put on Hold
Defence forces had high expectations of Nirmala Sitharaman's Budget as she was the former defence minister and is aware of the requirements.
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Union finance minister Nirmala Sitharaman in her debut budget speech on Friday allocated Rs 4,31,011 crore for the ministry of defence. The amount set aside for the ministry is almost identical to what had been allocated to it in the interim budget presented by then FM Piyush Goyal ahead of the Lok Sabha elections.

RATE The Budget

Out of the total allocation, Rs 3,05,296 crore ($44.6 billion) have been earmarked for Defence Expenditure (the actual defence budget), while the rest is civil expenditure which includes pensions and miscellaneous expenses.

This is also the first regular budget of the government after the Balakot airstrikes in February earlier this year, which initiated a feverish discussion on national security, which further dominated the political discourse throughout the general elections.

In terms of amount allocated, there is a marginal increase of 0.01 per cent in the defence budget in comparison to the interim budget.

On the other hand, it is an increase of 8.2 per cent over the Revised Estimates (RE) and 9.3 per cent over the Budget Estimates (BE) of the union budget 2018-19, respectively. The defence budget had crossed the Rs 3-lakh crore mark in the interim budget for the first time.

There had been expectation that Sitharaman, being a former defence minister, would hike the budget allocation for defence.

India's Air Force desperately needs hundreds of combat planes and helicopters to replace its Soviet-era aircraft while the Navy has long planned for a dozen submarines to counter the expanding presence of the Chinese navy in the Indian Ocean.

The Army, a large part of which is deployed on the border with traditional foe Pakistan, has been seeking everything from assault rifles to surveillance drones and body armour.

But tight government finances have further delaying a long-planned military modernisation programme.

Defence and national security found very few mentions in the two-hour long budget speech of the FM. Sitharaman in her speech in the Parliament announced that the government has decided to do away with basic customs duty on imports of defence equipment.

"Defence has an immediate requirement of modernisation and upgradation. This is a national priority. For this purpose, import of defence equipment that are not being manufactured in India are being exempted from the basic customs duty," she said.

The defence allocation is 10.95 per cent of the total Union Budget of Rs 27.86 lakh crore, which is again a minor increase of 11 basis points from what had been allocated in the interim budget. The overall share of the defence budget in the total union budget has been continuously falling over the years.

For instance, percentage share of defence budget in total budget was 11.69 per in 2014-15, which after seeing a dip to 11.24 per cent in 2015-16, surged to 12.59 per cent in 2016-17. This further increased to 12.72 per cent in 2017-18. In the Revised Estimates for the 2018-19 budget, the defence allocation has been pegged at 11.46 per cent of the total budget.

Meanwhile, defence allocation in proportion to the Gross Domestic Product (GDP) has been more or less constant through the years hovering in the range of 1.5-1.6 per cent of the GDP except for figures of 1.48 per cent and 1.46 per cent in 2018-19(RE) and 2015-16, respectively.

Moreover, India's defence budget of US$ 44.6 billion is over six times more than the defence budget of Pakistan (US$ 7.27 billion) presented in June this year. However, it is miniscule in comparison to the defence budget of China (US$ 177.6 billion) and the United States of America (US$ 716 billion).

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