In the wake of the heightened tension with China at the Ladakh border, armed forces are expecting a higher budget allocation to meet the operational preparedness. Amidst the military standoff with China and the possibility of two-front war, with Pakistan willing to grab any such opportunity, key South Block mandarins hope that the Union finance ministry loosens the purse strings.
With key modernisation programmes like IAF's 114 fighters, P 75 (India) class submarines, carrier-based fighter jets and helicopters the for Indian Navy, armed drones, and artillery modernisation for the Army in the pipeline, all eyes are on Union Finance Minister Nirmala Sitharaman, who has earlier served as the defence minster.
As Chinese military has taken an adamant stand with no immediate signs of disengagement, India needs to be prepared for any eventuality. Both sides have amassed huge numbers of men and machines on the border.
Numerically, the two neighours are hardly a match, as China's defence budget is four times higher at $225 billion (public domain information) compared to that of India, which is approximately $55 billion. Besides, Chinese People's Liberation Army has over two million troops employed in active military service, compared to Indian Army's 1.3 million.
Though there are multiple modenisation projects that need immediate attention, the budget allocation is expected to be primarily focused on indigenous procurement and research and development (RD) of arms and ammunition for the defence sector. Key acquisitions, ranging from fighter jets, helicopters and drones to artillery guns and infantry weapons, need to focused as part of the operational preparedness.
Last year, the Union government had hiked the defence budget by six per cent to meet the needs of the armed forces. An amount of ₹ 4,71,378 crore was allocated to the defence sector in last year's budget, which included expenditure on salaries and pensions.
Recently, the Union finance ministry released an additional Rs. 8,500 crore to the forces. The additional allocation of budget came in the revised estimate (RE budget) category. While Rs 6,000 crore was given under the revenue allocation to meet the day-to-day needs of deployed troops on the border, Rs 2,500 crore was for modernisation under the capital allocation category.
Ever since tensions erupted in May last year on the border with China, the Union government has been supportive, repeatedly assuring the forces that there will be no shortage of funds to deal with any misadventure by Chinese troops.
With the aim to reduce India's reliance on imported arms, various measures were announced, including an embargo on import of 101 items. Simultaneously, the Centre had enhanced the FDI up to 74 per cent under automatic route for companies seeking new industrial licences with motive to improve the ease of doing business and contribute to the growth of investment, income and employment.
Bifurcating capital procurement between domestic and foreign capital procurement routes, a separate budget head was created with an outlay of nearly Rs 52,000 crore for domestic capital procurement in the current financial year.
Amidst the debate of prioritising its requirements due to budgetary constraints, the ministry of defence, in March, had given the go-ahead to armed forces to procure military platforms on rent from friendly countries. While the IAF is looking to hire trainer jets and mid-air refuellers, the Navy can also go for leasing of operational support assets and auxiliaries to avoid huge investments in manning and maintaining them. Some argue that it is still unclear whether the armed forces will get brand new equipment or old ones in the leasing option.