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Union Budget 2018: Share of Defence Budget in GDP Lowest Since China War

By: Uday Singh Rana

Edited By: Tarun Bhardwaj


Last Updated: February 01, 2018, 16:09 IST

(Representational Image)

(Representational Image)

In the 2018-19 Union Budget, the amount of Rs 2.95 lakh crore works out to around 1.58% of India’s Gross Domestic Product (GDP).

New Delhi: Finance Minister Arun Jaitley on Thursday presented the Union Budget on the floor of the Parliament. The budget for the Ministry of Defence (MoD) was estimated at Rs 2.95 lakh crore, which does not include the budget for Defence Pensions.

The total defence outlay of Rs 2.94 lakh crore is a hike of 7.81% compared to the allocation made to the MoD last year. While this was an increase from last year and was 12.1% of the Central government’s total expenditure, the defence budget’s share of the GDP is at the lowest it has ever been since the 1962 war between India and China.

In the 2018-19 Union Budget, the amount of Rs 2.95 lakh crore works out to around 1.58% of India’s Gross Domestic Product (GDP). The last time the share of defence in the GDP was lower than this was in the 1962 Union Budget, when a war had broken out between India and China in October. Following the war, the share of defence in the GDP was increased from 1.5% to 2.31% in the 1963 Union Budget.

Of the total Defence Outlay, Rs 1.95 lakh crore was allocated for revenue expenditure (which includes day-to-day expenditures of the armed forces) and Rs 99,500 lakh crore was allocated for capital expenditure (which includes capital expenditure and modernization). The Defence Capital expenditure is up from Rs 86, 529 crore.

The Defence Pension, which is over and above the defence budget, was pegged at Rs 1.08 lakh crore. This is the first time India will spend more on pensions than it will on capital expenditure. Moreover, this is also the first time the pension amount has breached the Rs 1 lakh crore mark. This is a whopping rise of 26.6% from the Rs 85,740 crore allocated for Defence Pensions last year.

The increase of Rs 13,000 crore in the capital expenditure gives the armed forces some more leeway to modernise its aging equipment. However, experts suggest that for the Indian Armed Forces to realise their full potential, the share of the defence budget in the GDP needs to be at least 2%.

The Indian Air Force (IAF) has been largely dependent on MiG 21s and MiG 27s. These Soviet-era aircraft are fast becoming obsolete and reports of malfunction are not uncommon. So bad is the condition of the MiG that it has earned the ominous epithet of “Flying Coffin” and “Widow-maker”. There have been at least 10 accidents involving the MiG over just the last five years.

The entire fleet will have to be replaced with modern aircraft and fast. A deal is in the works and India is all set to buy 126 such aircraft. What needs to be decided now is which fighter jet India will buy. The choice is between two good aircrafts – The F 16 Block 70 produced by American firm Lockheed Martin and the JAS 39 Gripen E by Swedish company Saab. The deal, whoever wins it, will be inked under Prime Minister Modi’s ‘Make in India’ doctrine. The aircraft will be manufactured on Indian soil. For the Make in India push, Lockheed Martin has tied up with Tata while Saab recently announced a partnership with the Adani Group.

But India’s air prowess is on the descent. According to figures tabled by the Ministry of Defence in the Lok Sabha during the Winter Session of Parliament last month, India will have less squadron by 2025 than it currently possesses. To make matters worse, numbers reveal that the Modi government would not have added any new squadrons to the IAF by the end of its first term in power by 2019.

During the 2014 Lok Sabha elections, the Bharatiya Janata Party (BJP) lashed out at the ruling UPA by expressing “concern” at the pace at which squadrons were being added to the Indian Air Force (IAF). The BJP in its manifesto called it an “indication of the surrendering of India’s interests” and called for a complete overhaul of the system. But figures tabled in the Lok Sabha by the Ministry of Defence reveal that there would be no net increase in the number of squadrons added by the NDA government in its five-year tenure. In fact, by 2025, the IAF may end up having less squadron than it currently possesses.

The Indian Air Force currently possesses 32 squadrons but three squadrons of MiG-21 aircraft will be phased out by 2020. By 2019, the government plans the introduction of two squadrons of Su-30MKIs. Two squadrons of the Jaguar are also set to retire during this period. Between now and 2025, the government plans to procure two additional squadrons of the Su-30MKI, two squadrons of the Rafale and six Squadrons of the Tejas, a single-engine fighter. So, while India will see 12 squadrons retire by 2024, the country will have added only 10 to offset those losses by 2025.

Air Chief BS Dhanoa’s assessment that India plans to have a 42-Squadron Air Force by 2032 seems tough to achieve given the current pace of procurement by the Indian government. But one way in which the government may just be able to pull off this feat is if it manages to ink deals for single-engine fighter aircraft with haste.

Air Defence expert Air Vice Marshal (retired) Manmohan Bahadur said, “It may seem difficult at this stage to have 42-squadrons by 2032 but I think we can pull it off. It all depends on the pace at which the Tejas is manufactured and whether India will be able to procure single-engine fighter jets on time.”

As India gets set to play a more active role in the Indian Ocean Region (IOR) and the Indo-Pacific, with an aggressive China expanding its ‘String of Pearls’, a powerful, new-age, well-equipped navy is essential to not only guard over 7,500 kms of its coastline but also to secure India’s interest in the IOR.

While the Indian Navy received some relief with the commissioning of INS Kalvari, it still has to make do with a fleet of 13, mostly aging, submarines. Navy Chief Admiral Sunil Lanba had said earlier that India planned to have a fleet of 22 submarines by 2020-21. With just three years and eight more submarines left to be acquired, the Navy will hope its modernisation budget for ‘New Schemes’ goes higher than last year’s.

The Army, too, needs new equipment and fast. The Army is in urgent need of reconnaissance helicopters and Army Chief Bipin Rawat, at the Army’s annual press conference this month, said the army was looking at 2019 to replace the aging fleet of Chetak helicopters. Speaking on the acquisition of new assault rifles for the Army, the chief struck a realistic note. “The Hi-Tech assault rifles with night-firing capability cannot be given to the entire army because they are expensive. So they will be given to infantry soldiers at the border, who face the adversary first,” he said.

2018 will also be the year the Indian Army will address the shortfall of newer Bullet-Proof Jackets (BPJs), particularly with troops serving at the Line of Control in Jammu and Kashmir. The Chief said, “Our BPJs are ineffective against some of the weapons used by insurgents so we had to issue a new GSQR for new bulletproof jackets. The testing and procurement process has begun. So, we will have jackets coming in batches of 20, 000-25,000 every quarter and our requirement will be met by 2019. We even had to send some BPJs and ballistic helmets to the UN peacekeeping mission. The old BPJs are not very effective against steel-core bullets of the AK47 used by terrorists.”
first published:February 01, 2018, 16:09 IST
last updated:February 01, 2018, 16:09 IST