Indian Defence Review

Pic Courtesy: Sumit Walia

Finance Minister Arun Jaitley presented his third Union Budget. With an eye on supporting the small tax-payer and the small investor, the Minister announced a slew of schemes, and income tax exemptions, reports the Hindu.

Surprisingly the finance minister made no mention of India’s defence allocation for 2016-17 in his Union Budget speech on Monday, 29 February 2016. This raised immediate curiosity, over why, the country’s military spending was not revealed. This is in fact the first time when defence allocation has not been revealed during the annual budget speech.

Interestingly the budget uploaded on the official web site (indiabudgetnic.in) reveal interesting figures which in no way suggest a rosy picture, when, it comes to dealing with internal and external security challenges confronting our nation.

India’s Defence Budget was reflected as Demand number 20 to 23 of the Union Budget, when compared to initial allocation and Revised Estimates (RE) of 2015-16,it had the following to offer:

Fig – 01: The Data excludes the Pension Budget of 82331.66 cr of Demand 21 of the Defence Budget

Percentage increase and decrease in the BE 2016-17 compared to the previous FY 2015-16

Fig - 02

There has been a marginal increase of 2.93% over the BE 2015-16, however there shows an increase is 8.79% over the revised estimates of the previous FY ending March 31, 2016. The point of serious concern is the decline in the Capital Budget by 7.67% over the BE 2015-16.

Underutilisation of Capital budget allotted in BE 2015-16 by 12972 crore is reflective of a serious need to review our existing Defence Procurement Policy and also the inability of the MoD to spend the budget allotted for modernisation.

The constantly dwindling capability of our armed forces is awaiting serious modernisation. To achieve the goals set under Long Term Integrated Perspective Planning 2015-27, experts feel, at this rate the deadlines are going to severely fall short.

Approximately 90% of the capital budget goes into payment of instalments of previously inked deals, balance 10% is available for fresh contracts. With the allocation of 90614.63 cr in this FY year, we are unlikely to expect any big ticket deals in the offing. This is enough to ring the alarm bells in the defence establishment.