Even after Balakot air strikes, defence budget remains unchanged at Rs 3.18 lakh crore

Army, Navy and Air Force were hoping for increased allocation as they are in the midst of a modernisation process, with several projects waiting to be kicked off.

Former defence minister and current finance minister Nirmala Sitharaman with Army Chief Bipin Rawat | PTI

New Delhi: After the Balakot air strikes and the subsequent air battle between India and Pakistan on 26-27 February, India’s three services were expecting an increase in the budgetary allocation for defence. But they were left disappointed as Finance Minister Nirmala Sitharaman kept India’s defence budget unchanged from the interim budget at Rs 3.18 lakh crore.

The lack of change in the budget figures means that the actual hike in the defence budget is just 6.87 per cent more than the revised estimate of Rs 2.98 lakh crore for the financial year 2018-19. The allocation, however, is barely enough to cover inflation costs.

Sitharaman has rejigged the allocations under various heads — capital, revenue and civil. There has been a small reduction of Rs 14 crore in the capital budget and an increase of Rs 3,416 crore in revenue allocation, which has been adjusted under the civil and miscellaneous heads.

The only relief for the armed forces is that Sitharaman, who served as defence minister in the first Narendra Modi government, has removed the customs duty on defence products, which means that the services will not have to pay anything as import duty as done since 2016.

Although in 2016, the ministry had assured the Services they will get back the customs duty paid, it never happened. “It was like our purchasing power had decreased by 30 per cent because of the customs duty paid,” a top officer in the defence establishment told ThePrint.

New projects in limbo

However, the services were hoping for an increased allocation because they are in the midst of a modernisation process, with projects related to new submarines, helicopters and fighter aircraft waiting to be kicked off.

“We understand that there are constraints but we were expecting the minister to actually increase the allocation from the interim budget,” a senior uniformed officer told ThePrint on the condition of anonymity.

The Indian military is facing a collective threat from Pakistan and China, who are focussing heavily on modernising their armament. Last year, China had raised its defence budget by 8.1 per cent to 1.11 trillion yuan (about $175 billion), which is four times India’s defence budget.