Parliament's Standing Committee on Defence welcomes larger fund allocation

“Guns versus Butter -1”

The first of a five-part series analyses the military’s capex demand versus allocation

 

By Ajai Shukla

Business Standard, 29th March 23

 

The 37^th Report of the 17^th Lok Sabha’s Standing Committee on Defence reveals that after five years of under-providing funding for capital expenditure, the defence budget for Financial Year 2023-24 (FY 24) has this year allocated to the defence services the capital funding that they projected as their requirement for the year.

 

In the current system of allocating funding, the army, navy and air force separately work out their requirement for the year. These projections are sent by the Ministry of Defence (MoD) to the Ministry of Finance (MoF) for allocation as a part of Demand Number 21, which is the “capital outlay on defence services, procurement policy and defence planning.”

 

However, the 37^th Standing Committee’s Report, which was presented in both houses of Parliament on March 21, indicates that in FY 2018-19, the MoF allocated just 52 per cent of the services’ capex projection. This rose annually to 59 per cent, 63 per cent, 61 per cent, 68 per cent, until this year’s budget saw the allocation of 100 per cent of the services’ projections.

 

In the Revised Estimates (RE) for the same period, the MoF allocated just 59 per cent of projections in FY 2019-20; and then 60 per cent, 77 per cent and 78 per cent in the following years, to a respectable 99 per cent in last year’s revised estimates.

 

In the budget estimates for FY 24, the total projection of the army, navy and air force was Rs 148,955 crore – while the capex allocation amounted to the same figure.

 

“The Committee are satisfied to note that the allocation made to the MoD for FY 24 has put forth the demand of Rs. 37,341, 52,804 and 58,808 for Army, Navy and Air Force respectively under capital head and was granted the same by the MoF, without any deductions,” stated the report.

 

The report, however, remains mindful of the possibility that supplementary funds might be required, over and above what has been allocated in the budget. In that case the MoF would have to make additional funds available in the RE.

 

“The Committee, therefore, recommends that it is incumbent upon the Ministry to take insightful analysis of the expenditure of the allocated funds during the first two quarters of the ongoing financial year (2022-23) so that in case of need of supplementary grant, timely approval can be obtained from the Ministry of Finance at the RE stage,” said the report.

 

The defence capital outlay provides for land and construction works of the three services, defence equipment, tanks, naval vessels, aircraft and aero engines and dockyards. This is for various services and organisations of the Ministry of Defence, including the army, navy, air force, joint staff, Rashtriya Rifles, defence ordnance factories, Defence Research & Development Organisation (DRDO), Director General Quality Assurance (DGQA), National Cadet Corps (NCC) and the Married Accommodation Project (MAP).