Sunday, 3 July, 2022
HomeDefenceModi govt removes spending cap on defence for Q3 amid tensions with...

Modi govt removes spending cap on defence for Q3 amid tensions with China

Removal of expense cap means defence ministry, which is processing over 100 emergency procurement contracts, can go ahead with spending without permission from finance ministry.

Text Size:

New Delhi: Amid the ongoing stand-off with China and the massive military procurement underway, the Modi government has removed expenditure curbs on defence spending in the third quarter of the financial year, ThePrint has learnt.

This means that the defence ministry, which is processing over 100 emergency procurement contracts, with a ceiling of Rs 500 crore each, can go ahead with its spending without permission from the finance ministry.

The finance ministry had placed expenditure curbs on government ministries and departments in the first two quarters of the current fiscal year in light of the Covid-19 pandemic, as revenues lagged expenditure outgo by a huge margin.

Many were asked to restrict their quarterly spending to either 20 per cent or 15 per cent of the full-year budget allocations.

However, ministries at the forefront of the Covid-19 battle like health and family welfare, pharmaceuticals, food and consumer affairs, rural development, civil aviation, railways, and textiles were exceptions that were allowed to spend without any restrictions.

However, sources in the finance ministry said, expenditure curbs on defence services have also been done away with for the third quarter.

As a result, in the October to December quarter, the ministry will be able to spend in line with their quarterly expenditure plan and the detailed demand for grants that was part of the budget.

However, if any department needs urgent additional funds, it will have to approach the finance ministry for approval.

Also Read: These are the challenges Indian Army will face in Ladakh this winter, besides the Chinese

Emergency procurements

As reported by ThePrint, the scale of emergency procurement being done in the wake of the stand-off with China could easily eclipse the Rs 11,000 crore worth of contracts inked after the Uri terror attack in 2016.

In the 2020-21 budget, an amount of Rs 1,13,734 crore was earmarked under capital expenditure for the armed forces.

However, the defence ministry is likely to seek more funds because the China factor was not taken into account at the time of the budget, which was announced in February, two months before the situation at the Line of Actual Control (LAC) began to get tense.

Speaking to ThePrint, defence ministry officials said they are confident that the government will give them additional funds if required. Last year too, the ministry had got additional funds to the tune of Rs 10,000 crore.

The armed forces are currently focusing on a spate of emergency purchases, including assault rifles, logistics material for the additional troops deployed in Ladakh, various kinds of surveillance equipment, missiles and others.

This week, the government accorded approval for the procurement of 72,400 additional SIG 716 rifles for approximately Rs 780 crore under emergency procurement.

Along the LAC, the Army is also beginning to equip its troops with the assault rifles, bought from the US last year.

For the entire fiscal year, the capital outlay for defence services is estimated at Rs 1.13 lakh crore, while that for revenue is Rs 2.29 lakh crore.

According to data available with the Controller General of Accounts, the apex accounting agency of the central government, for the five months ending August, spending on defence services (revenue) was at 41 per cent of the full-year budget estimates at Rs 86,719 crore. The expense on capital outlay was at 37 per cent of the full-year budget estimates at Rs 42,137 crore. 

Also Read: The long list of misses, and few hits, in India’s defence acquisitions


Subscribe to our channels on YouTube & Telegram

Why news media is in crisis & How you can fix it

India needs free, fair, non-hyphenated and questioning journalism even more as it faces multiple crises.

But the news media is in a crisis of its own. There have been brutal layoffs and pay-cuts. The best of journalism is shrinking, yielding to crude prime-time spectacle.

ThePrint has the finest young reporters, columnists and editors working for it. Sustaining journalism of this quality needs smart and thinking people like you to pay for it. Whether you live in India or overseas, you can do it here.

Support Our Journalism

Most Popular