BUCKING TREND For the first time in recent years, finance minister leaves out defence from speech, hikes outlay by 9.76%
IF TH E H IKE IN TH E DEFENCE OUTLAY IS CALCULATED AG AINS T TH E BUDG ET ES TIMATES OF 2015-16, IT WORKS OUT TO ONLY 1.16%
NEW DELHI: India will spend ` 2.58 lakh crore on defence in 2016-17, a marginal hike of 9.7% over last year’s revised estimates of ` 2.33 lakh crore.
VIPIN KUMAR/H TThe government failed to spend ` 11,595 crore of its capital budget set aside for buying new weapons and systems last year.The military spending does not include defence pensions that would take up the budget to nearly ` 3.41 lakh crore compared to last year’s ` 2.93 lakh crore.
The pension component of the budget is huge at ` 82,332.66 crore, with the outgo towards implementing the one-rank-one-pension (OROP) scheme contributing to the financial burden. The allocation of military modernisation in the budget stands at ` 87,209.63 crore.
If the hike in the defence outlay is calculated against the budget estimates of 201516, it works out to only 1.16%. Finance minister Arun Jaitley made no mention of India’s defence allocation in his Budget speech on Monday.
The defence ministry failed to spend ` 11,595 crore of its capital budget earmarked for buying new weapons and systems last year, besides over
` 6,700 crore of the expenditure budget remained unspent.
The defence budget for 2016-17, excluding pensions, accounts for 1.7% of the country’s gross domestic product.
Experts believe India’ s military spending should be around 3% of the GDP to counter China’s rapidly growing military might, but the figure has been hovering below 2% in recent years.
If the pensions are counted, the allocations account for 2.2% of the GDP.
Experts feel that the funds made available to the armed forces may not be sufficient to power critical modernisation programmes.
India’s military modernisation effort centres around buying new fighter planes, building next-generation submarines, helicopters, missiles and artillery guns.
Strate gic af fairs exper t Brigadier Gurmeet Kanwal ( retd) said, “I don’t think there’s been a hike at all in real terms. The rupee has fallen against the dollar from 62 to 69. Also, inflation in prices of weapon systems can be around 15%.”
This year’s defence spending includes a revenue expenditure of more than ` 1.68 lakh cr ore meeting day-to-day expenses of the armed forces.
India’s defence spending averaged 1.59% of the GDP from 1947 to 1962, the year India fought a war with China. The country sustained a defence spending of 3.1% of the GDP between 1963 and 1988, but it has remained under the 2%-mark for several years now.
The budget also talks of changes in customs and excise duty rates on certain inputs to reduce costs and improve competitiveness of domestic industry and promote the Make in India plan in sectors including defence production, maintenance, repair and overhauling of aircraft and ship repair.