Defence budget unchanged at Rs 3.18 lakh crore from interim budget

The defense budget remained unchanged at Rs 3.18 lakh crore, the amount set aside in the interim budget in February, notwithstanding expectations of steep hike in resources to modernize the armed forces and procure critical military platforms. The allocation made in the Union Budget is an increase of 6.87 percent over revised estimates of Rs 2.98 lakh crore given in 2018-19.

The allocation of Rs 3.18 lakh crore has been estimated at around 1.6 percent of the GDP which, according to experts, is lowest since the 1962 war with China. In the interim budget presented on February 1, the defense budget was pegged at Rs 3.18 lakh crore and there was no change in the allocation.

In a significant move, import of defense equipment not manufactured in India has been exempted from basic customs duty by Finance Minister Nirmala Sitharaman. She said the defense has an immediate requirement of modernization and it is a "national priority".

"This will have an impact of augmenting the defense budget by approximately Rs 25,000 crore on account of savings in expenditure on customs duty over the next five years," the defense ministry said. In the wake of the Balakot strikes and China aggressively modernizing its armed forces, there were expectations from the three services allocation will be significantly hiked by Sitharaman, who was defense minister in the previous government.

"The capital allocation is not adequate to modernize the armed forces. Everyone was expecting a significant hike in allocation, but unfortunately, it did not happen," said Laxman Behera of Institute of Defence Studies and Analysis. Out of the total allocation, Rs 1,08,248 crore has been set aside for capital outlay to purchase new weapons, platforms and military hardware.

The revenue expenditure which includes expenses on payment of salaries and maintenance of establishments has been pegged at Rs 2,10,682 crore as against Rs 1,88,118 crore for 2018-19. The allocation of Rs 3,18,931 represents a growth of 7.93 percent over budget estimates of Rs 2.95 lakh crore and 6.87 percent over revised estimates Rs. 2.98 lakh crore respectively for 2018-19.

The total outlay does not include Rs 1,12,079 crore set aside separately for payment of pensions. If allocation for pension is included, then the total outlay for defense stands at Rs 4.31 lakh crore which accounts for 15.47 percent of the total central government expenditure for the year 2019-20.

"The capital allocation of Ministry of Defence under BE (budget estimate) 2019-20 is 31.97 percent of the total Central government capital expenditure, which is Rs 3,38,569 crore," the defense ministry said. Under capital outlay, the Army was granted Rs 29,447 crore, the Navy was given Rs 23,156 crore and the Indian Air Force got an allocation of Rs 39,302 crore.