Modest 6.8 Per Cent Hike in India Defence Budget of $46.5 B

Issue: 7 / 2019By Vishal ThaparPhoto(s): By IAF
The modest increase in Defence spending is unlikely to ease the resource crunch for the armed forces in a scenario which demands high levels of military readiness.

The Government on July 5 announced a Budgetary allocation of 3,18,931.22 crore ($46.5 billion) for Defence services as part of the overall 27,86,349 crore ($406 billion) Union Budget for 2019-20, marking a modest 6.87 per cent increase in India’s spending on the defence services.

What brought some cheer to defence planners was Finance Minister Nirmala Sitharaman announcement of an exemption of Customs duty for imported military equipment. The Ministry of Defence later claimed that this exemption would effectively boost the military modernisation budget by 25,000 crore ($3.6 billion) over the next five years.

Of the three armed forces, the Indian Air Force and Navy have higher allocations for modernisation than for recurring Revenue expenditure on fixed costs. At 39,302.64 crore, the IAF gets the lion’s share of the Capital allocation for modernisation. It’s Revenue Budget is 29,601.69 crore. The Navy gets 23,156.43 crore under the Capital head against a Revenue allocation of 22,211.71 crore. But this favourable Capital-Revenue ratio is reversed by the Army’s huge allocation of 1,41,501.19 crore for fixed costs, mainly on account of its huge manpower bill. Against this, the Army’s Capital allocation for modernisation stands dwarfed at 29,461.25 crore.