“India’s defence budget suffers from not only under-allocation but also under-utilization.” Discuss.
Published: March 5, 2017
The total defence expenditure is expected to be 1.6% of GDP in 2017-18 and 2018-19. The standing committee of Defence and analysts wants this figure to be at least 3% of GDP and says that this is under-allocation. The Budget cuts are expected to affect modernisation of the armed forces.
However, before the Ministry of Defence can ask for more funds, it needs to address the issue of under-utilisation of the capital budget. As per the estimates, approximately Rs.7,000 crore worth of the capital budget is being underutilised. In this case, fingers are pointed towards the finance ministry as underutilisation of the capital budget is due to finance ministry’s machinations, which prevent big contracts from getting approved.
More worryingly, the allocations made for maintenance of equipment currently in use is also inadequate. Similarly, allocation towards war wastage stock including ammunition stock is largely the same as last year. In addition to focus on “Make in India” in defence, it is expected that indigenous design and development are undertaken by Indian industry for producing important components. Since its introduction, no development project has been signed. It has been allocated a paltry Rs. 44.63 crore in assistance. This year’s budget is also silent on policy issues like the strategic partnership scheme and defence technology fund.
Out of Rs 2,74,114 crore outlay for defence sector, Rs 85,740 crore has been allocated for defence pensions. With more than 50% of the total expenditure to be spent on salaries and pensions, how the government intends to carry out modernisation of the armed forces is yet to be seen. The way forward for the government is to opt for outcome oriented monitoring of utilisation of outlays as suggested by the Standing Committee on defence. This will help in wise spending of resources to achieve desired outcomes. Lastly, unnecessary bureaucratic hurdles in defence acquisitions have to be eliminated.
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