Raise Defence Spending to Meet Challenges

Context: Amidst the ongoing standoff between India and China along the Line of Actual Control (LAC), the hike in the defence budget is insufficient and negligible.

Analysis of Budgetary Measures for Defence Sector

• Payment of pensions: total outlay for the Ministry of Defence (MoD) is pegged at Rs 4,78,195.62 crore, with pension liabilities down by Rs 18,000 crore from the present fiscal.
  • The total revenue expenditure includes Rs 1.15 lakh crore for the payment of pensions.
• Military weapons and modernisation:
  • Increased budget for weapons and modernisation (18% increase)
  • Air Force, Navy and Army overshot its original allocation by Rs 11,773 crore, Rs 10,854 crore and Rs 821 crore respectively in current fiscal.
• Civil allocation: (includes allocation for construction of roads and bridges, government aid to state governments and housing in the North East and border areas).
  • Estimated budget for the civil work was increased (from Rs 14,500 crore to Rs 15,914 crore) for building border infrastructure.
  • The allocation for the Border Roads Organisation has been increased by 7.48%.
• Proposal of a non-lapsable fund: (Rs 2.38 lakh crore) for a period of five years (2021-26) ;
  • Can be used for the modernisation of forces, capital investment for Central armed police forces and also state police forces.
• Defence manufacturing: with the coming up of two Defence Industrial Corridors and the target of achieving $5 billion defence equipment exports by 2025 the budget outlay seems to be insufficient.
• Defence Research: The capital allocation for the Defence Research and Development Organisation (DRDO) has been pegged at Rs 11,375 crore, which is an increase of 8%.

Conclusion: India needs to increase its defence outlay from 2.1 to 3% of GDP to meet the new two-front external threats from China and Pakistan, and achieve the goal of Atmanirbharta in defence manufacturing.