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Defence budget crosses Rs 3 lakh crore, but lowest ever with respect to GDP

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While Pakistan and China are focusing on modernising their armament, India’s own modernisation process could suffer because of the small increase in budget.

New Delhi: India’s defence budget has crossed Rs 3 lakh crore for the first time, Finance Minister Piyush Goyal announced Friday but it is the lowest it has ever been with respect to the GDP.

The allocation for defence in the 2019-2020 interim budget is Rs 3.18 lakh crore, just 1.51 per cent of the GDP. It is also a 6.87 per cent increase of the Revised Estimate of Rs 2.98 lakh crore for the financial year 2018-19.

Goyal had announced with much fanfare that the defence allocation had breached the Rs 3 lakh crore mark for the first time. “Our defence budget will be crossing Rs 3,00,000 crore for the first time in 2019-20,” he announced. “For securing our borders and to maintain preparedness of the highest order, if necessary, additional funds would be provided.”

Doesn’t cover inflation costs

The allocation, however, is barely enough to cover inflation costs. The Rs 3.18 lakh crore would mean that the defence budget for 2019-20 has seen a meagre increase of about two per cent from last year’s figure of Rs 2,95,511.41, which barely covers inflation.

The meagre increase also comes at a time when the military is in the midst of a massive modernisation process and is facing a collective threat from Pakistan and China, who are focusing heavily on modernising their armament.

China had last year raised its defence budget by 8.1 per cent. Its 2018 defence budget was 1.11 trillion yuan (about $175 billion, which is four times of India’s defence budget), according to to the budget report last year.

Also read: Budget 2019: Where the government will earn and spend its rupee

The allocation last year

The Finance Ministry in a statement said that Rs. 2,82,733 crore was provided in 2018-19 budget estimates. The figures were revised to Rs. 2,85,423 crore in the revised estimates of 2018-19.

Last year, however, the ministry had issued a statement saying the allocation of “Rs 2,95,511.41” crore for 2018-19 represented a growth of 7.81 per cent over budget estimates (Rs 2,74,114.12 crore) and 5.91 per cent over revised estimates (Rs 2,79,003.85 crore), respectively for the financial year 2017-18.

Sources said the difference between the two figures was because the ministry did not take into account the miscellaneous expense for last year.

Also read: The hits and misses of Arun Jaitley’s Budgets


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