BUDGET 2018

Modest hike for defence means modernisation to take back seat

defence-parade-pti Representational image | PTI

The modernisation and re-equipping of the world's third-largest military will take a back seat as routine maintenance expenditure is going to take away a major chunk of the allocation of the defence budget.

With a modest hike of 7.81 per cent, the defence budget for the year 2018-19 has not brought any surprises.

Amid tension with China over the Doklam standoff and constant ongoing counter-insurgency operations in Jammu and Kashmir, the hike from Rs. 2.74 lakh crore to Rs. 2.95 lakh crore will not give any boost to modernisation, as majority of this allocation will go into the committed liabilities, which means pending payments for already-signed contracts.

Major deals for which payments are being made include 36 Rafale warplanes, Apache attack helicopters, six-C-130J transport aircraft, Chinook heavy-lift helicopters, P8I maritime reconnaissance aircraft and M-777 ultra-light howitzers.

With hardly any money left for new purchases, defence pensions for the first time reached Rs. 1.08 lakh crore for this year, which will be a sharp increase of 26 per cent compared with last year's allocation. Besides, salary bill for the serving personnel will be Rs 1.15 lakh crore in the coming year.

With this, the defence budget is only 1.57 per cent of GDP in 2018-19, as against the repeated demand of the armed forces that defence spending should not be below 2 per cent of the GDP, considering the hostile neighbourhood of the country.

This is the the lowest spending in terms of share of the country's GDP since the 1962 war with China.

"The allocation of Rs. 2.95 lakh crore represents a growth of 7.81 per cent over budget estimate (2.74 lakh crore) and 5.91 per cent over revised estimates( Rs. 2.79 lakh crore), respectively, for the financial year 2017-18. And out of Rs. 2.95 lakh crore, Rs 1.95 lakh crore has been allocation for revenue expenditure and Rs. 99 lakh crore for capital expenditure. This amount of capital budget includes modernisation-related expenditure. This year’s defence allocation accounts for 12.1% of the total Central government expenditure," an official statement said.

However, in a rare achievement, the defence ministry was able to spend all its modernisation budget in the last financial year and no money has been returned to the national exchequer.

For the third time in the row, Union Finance Minister Arun Jaitley did not give out the budgetary allocation for defence in his speech in the Parliament, while tabling the budget.

“A number of initiatives have been taken to develop and nurture intrinsic defence production capability to make the nation self-reliant for meeting our defence needs. Ensuring adequate budgetary support will be our priority,” Jaitley said in his budget speech, while adding that the government will take measures to develop two defence industrial production corridors in the country.

"The government will also bring out an industry-friendly Defence Production Policy 2018 to promote domestic production by public sector, private sector, and micro, small, medium enterprises (MSME),” he stated.

Later in the day, the defence ministry clarified that the first defence industrial corridor will be built starting at Tamil Nadu, linking Chennai and Bengaluru and announcement for the second corridor will be made soon.

The Modi government has taken several measures to boost the Make in India programme to overcome the armed forces' dependence on exports of military hardware. Last year, the strategic partnership (SP) model was included in the Defence Procurement Procedure (DPP) with an intention to give a suitable platform to defence manufacturing in the country.

While mentioning about infrastructure in border areas, Jaitley said, "Rohtang tunnel has been completed to provide all-weather connectivity to the Ladakh region. Contract for construction of Zojila Pass tunnel of more than 14km is progressing well. I now propose to take up construction of tunnel under Sela Pass (in Arunachal Pradesh)."

Meanwhile, with several space programmes on its way, the Union budget has enhanced allocated money from Rs. 4,938 crore to Rs. 5,496 crore. And capital budget for the new space programme has jumped to Rs. 5,287 crore in comparison with 4,155 crore last year.

Similarly, the nuclear energy sector has not been given much allocation of budget, with an enhancement to Rs. 7,834 crore this year compared with Rs. 7,264 crore.  

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