Despite China border confrontation, defence allocations remain flat, air force gets the largest capital boost

By Ajai Shukla

 

In a situation of heavy pressure on the economy, while also confronting an intrusion by Chinese troops on the border in Ladakh, the government has kept the defence budget for the coming at approximately the same level as the current year, allocating Rs 4,78,196 crore rupees (Rs 4.78 trillion) for 2021-22.

Defence allocations from 2017-18

 

(In rupees crore)

	2017-18 (Actual)	2018-19 (Actual)	2019-20 (Actual)	2020-21 (RE)	2021-22 (BE)
Revenue allocation	192273	202070	221510	222726	224635
Capital allocation	95431	99611	113675	137010	137711
Pension allocation	92000	101775	117810	125000	115850
Total Defence Budget	379704	403456	452995	484736	478196
Total central govt spending	2141973	2315113	2686330	3450305	3483236
Defence as percentage of govt spending	17.7%	17.4%	16.9%	14%	13.7%
Gross Domestic Product	16784679	18722302	20339100	19481975	22287379
Defence as % of GDP	2.23%	2.16%	2.2%	2.4%	2.15%

 

(Source: compiled from budget documents)

 

The revised estimates for 2020-21 indicate the military has spent Rs 4,84,736 crore (4.84 trillion) this year, a significantly higher amount than what was allocated in February 2020.

 

The reason for this is learnt to be the emergency procurement of arms and ammunition that was triggered by the Chinese intrusions into Ladakh last April. Against Rs 118,534 crore (1.18 trillion) allocated for capital spending in the current year, the government has spent Rs 137,010 crore (1.37 trillion) – almost Rs 20,000 crore extra.

 

Much of the money for the extra capital spending was found by squeezing the pension budget. Of the Rs 133,825 crore (1.33 trillion) allocated for defence pensions, the government spent only Rs 125,000 crore (1.25 trillion). For the coming year, the government has slashed defence pension allocations by another Rs 9,000 crore.

 

Defence experts, many of whom have lamented the large share of the defence budget consumed by pensions, say the reduction is being made possible by the plan to increase the retirement age of soldiers, sailors and airmen. This has been proposed by the Chief of Defence Staff, General Bipin Rawat.

 

The expenditure of the current years capital budget is biased heavily in favour of the Indian Air Force (IAF), which has spent Rs 55,084 crore, compared to the Navy’s Rs 40,043 crore and the army’s Rs 33,283 crore. 

 

The army has the smallest share of the capital budget, even though it is facing the brunt of the Chinese intrusions in Ladakh and has undertaken a challenging winter deployment in the 15,000-foot-plus heights there.

 

The capital budget allocations for the coming year, 2021-22 are similarly skewed, with the IAF allocated Rs 53,215 crore, the navy Rs 35,904 crore and the army getting Rs 36,532 crore.

 

This underlines the IAF’s continuing burden of payments for the Rafale fighters it bought in 2016, modernization of the Mirage 2000 fighter fleet and the manufacture of additional Sukhoi-30MKIs and Tejas fighters by Hindustan Aeronautics Ltd (HAL). There is also a large expenditure looming on a tender for 114 multi-role fighters, for which the IAF has initiated a global procurement.

 

To the military’s credit, it has mobilised a large number of troops and equipment to the Ladakh frontier without seriously overshooting its revenue budget, from which payments for such a deployment is made. 

 

Against the revenue budget allocation of Rs 219,020 crore (Rs 2.19 trillion) for the current year, the military has spent Rs 222,726 (Rs 2.2 trillion) on conducting its operations countrywide, including in Ladakh.