India is the fifth largest military spender (2016) in the world and the largest importer of arms, accounting for 13 percent of the world’s total imports between 2012 and 2016, according to the Stockholm International Peace Research Institute, a think tank.
However, over three years to 2017-18, there was a 9 percent decline in budget allocation for capital investments against requirements, or “projections” in officialese, a factor that could delay procurement and modernisation of the armed forces, according to a report by the Parliamentary Standing Committee On Defence 2017-18, an advisory body to the defence ministry, presented to the Lok Sabha (lower house of Parliament) on 19 December, 2017.
The Indian Air Force capital budget was 46 percent lower than its requirements, the Indian Army’s was 41 percent and the Indian Navy’s 32 percent, the report said. The budget for defense expenditure — including revenue (salaries, transportation costs, stores), capital investments (equipment, ammunition), pensions and miscellaneous — in 2017-18 was Rs 359,854 crore, up 56 percent from Rs 230,642 crore in 2012-13.
Union Budget; Figures in Rs crore, *Budget estimate, **Revised estimate
Revenue expenditure accounted for 48 percent of defence budgetary allocation in 2017-18, up from 44 percent in 2015-16.Pensions and capital outlay accounted for 24 percent each of allocations, as against 20 percent and 24 percent in 2015-16, respectively.More than 75 percent of budget allocation (Rs 3,56,854 crore) and 80 percent allocation under the capital head (Rs 86,488 crore) in 2017-18 has been spent till December 2017, defence minister Nirmala Sitharaman told the Rajya Sabha (upper house of parliament) in her reply on 1 January, 2018.
Lower allocation for capital expenditure can delay procurement and projects
In 2017-18, the government, in its budget estimates, allocated Rs 86,529 crore for capital expenditure against the defence ministry projection of Rs 1,46,156 crore, according to the Parliamentary Standing Committee On Defence 2017-18 report submitted in December 2017.
The budget allocation for capital acquisition has declined for all three services — army, navy and air force — since 2015-16, the committee observed in its report. The budgetary cut against the projection will hamper the pending procurement projects, which will not get cleared unless the Centre increases allocation at the revised estimate (RE) stage, the committee said. It has suggested the government match allocations with demands, preferably at the revised estimate stage, so that services can meet the requirements of operational readiness.