New Delhi: There is a growing disparity between the monetary allocation that the armed forces seek for modernisation and what they eventually get in the Union budget.
Latest figures show that the gap is so wide that what the government allotted for 2021-22 under the Capital budget, was lower than the allocation that the forces had sought seven years ago in 2014-15.
This gap in what the forces project under capital expenditure and what is eventually allotted by the finance ministry has led to multiple projects getting delayed because of a cash crunch and a majority of the modernisation funds going into committed liabilities.
According to data provided in the Rajya Sabha in a written reply Monday, the armed forces had projected a need for Rs 1,32,597.69 crore in the 2014-15 fiscal for modernisation plans. The government, however, allotted just Rs 84,076.95 crore in that year’s budget.
This bill by the armed forces had risen to Rs 1,99,553.44 crore under the capital budget in this year’s budget demand. The government, however, eventually allotted Rs 1,23,000.22 crore, an amount less than what the Services had sought in 2014.
This works out to be roughly a 38 per cent downsizing from the Services’ demand as part of its modernisation plans, which comes at a time when tensions with China is at an all time high since the 1962 war.
Experts point out that the capital budget does not mean funds only for acquisition but also includes money for land and certain construction activities.
For example, in the 2020-21 budget, while the capital budget under the budgetary estimate was Rs 1,02,432.57 crore, only Rs 89,698 crore was meant for modernisation, according to Laxman Kumar Behera, associate professor at Jawaharlal Nehru University’s Special Centre for National Security Studies.
Talking to ThePrint, Behera said the budget deficit is not unique to the Narendra Modi government but added that the gap has become more acute in recent years because of which less money is available for new contracts as the majority of funds go into committed liabilities.
Committed liabilities is a term for payments that need to be made according to the schedule for contracts inked in the past.
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Forces face the cash crunch
Sources in the defence and security establishment said that the highest deficit has been felt by the Navy, which had projected a requirement of Rs 70,920.78 crore for the 2021-22 fiscal.
Against this, the Navy has been allotted a mere Rs 33,253.55 crore, less than half of what it had sought. This comes at a time when the Navy has planned a few big projects, including for new submarines, minesweepers besides unmanned aerial systems, and new warships among others.
The Army, which has been at the forefront of the tensions with China, had projected a need for Rs 51,492 crore for its modernisation budget, but eventually got Rs 36,531 crore this fiscal.
The Air Force has got just Rs 53,214.77 crore as against a projection of Rs 77,140 crore. This comes at a time when the IAF is looking at acquiring new fighters, missiles and unmanned aerial systems besides refuellers and Airborne Early Warning and Control (AEW&C ).
Defence budget up but share in capital outlay down
According to PRS India’s Legislative research, the defence budget has grown at an annual average rate of 8.4 per cent, while total government expenditure has grown at 10.3 per cent in the last decade (2011-12 to 2021-22).
The report also highlighted that over the last 10 years, the share of the defence budget spent on capital outlay has declined. The share spent on capital outlay was highest during 2011-12 at 30 per cent of the total defence budget, which fell to 22 per cent in 2018-19 (the lowest), and recovered to 27 per cent (in 2020-21).
According to the PRS paper, the committed liabilities in 2016-17 was Rs 73,553 crore and budget allocation was Rs 62,619 crore, a shortfall of 15 per cent.
This shortfall increased to 29 per cent in 2019-20, as the committed liabilities was Rs 1,13, 667 crore while the budget allocation was just Rs 80,959 crore.
(Edited by Arun Prashanth)
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This report has been updated to accurately reflect the Air Force’s projected demand — which is Rs 77,140 crore, not Rs 77,100 crore. The error is regretted.
One wonders where these authors come from (perhaps from Vatican/Pakistan?) that they don’t know anything about the net improvement in Indian defenses since BJP came to power!! The recent Chinese & Pakistani retreating from the borders is proof enough!!
If this was Nehru/congress’s govt., they would outdone their previous record of giving even more land to Islamic terrorists next door & communist China!!
I would like to know if the Defence pensions that are ALWAYS the item discussed when the budget is being talked about, are so high in only MoD.
OROP costs the GoI a pretty penny but what does it do in other ministries? Civil servants’ retirement benefits also go up. In fact, that was the main argument FOR OROP. But I think their benefits go from Min of Personnel.
What if we have a Department of Veterans such as they have in the US? ECHS can also be made a part of this.
If the governments start giving every ministry whatever it wants there will just not be enough money. SO
First: is the priority.
Second: instead of looking at the percentages actual figures may give a better picture, size of the pie has increased in the last 10 years so it is likely that the percentage may have gone down to provide for other essentials while figures would still be higher.
Third: what is the effective last mile reach if there is an improvement in the trickle down effect from the famous 15 Paise.
Fourth: Just as the expenditure on health starts from TOILETS, the the spends on defense should begin with the infrastructure.
Finally the sudden expenditure required to be incurred with unforeseen situations on borders.
India has hostile neighborhood. China particularly has far higher resources. Indian military will always be underfunded. Domestic manufacturing of high tech equipment is the only silver lining.