At 1.58% of the projected GDP for 2018-19, it is the lowest such figure since the 1962 war with China.
Ostensibly, Finance Minister Arun Jaitley isn't scared enough of twin border challenges India faces: China's continued aggression and Pakistan's nuisance. Though Jaitley has increased capital expenditure for defence, it is still woefully less than what is required.
At Rs 2.95 lakh crore, India's defence budget up 7.6% from Rs 2,74,114 crore last year. Capital expenditure is Rs 99,563 crore. At 1.58% of the projected GDP for 2018-19, it is the lowest such figure since the 1962 war with China.
In 2017-18, the government, in its budget estimates, allocated Rs 86,529 crore for capital expenditure against the defence ministry projection of Rs 146,156 crore, according to an Indiaspend report that cited the Parliamentary Standing Committee On Defence.
Though a capital expenditure of Rs 99,563 crore is higher, it's still not even close to the requirement if one goes by the defence ministry projection of Rs 146,156 crore.
According to the committee, the budget allocation for capital acquisition has declined for all three services-army, navy and air force-since 2015-16.
The capital component of the budget allocation has declined in comparison to the revenue component since 2012-13, the committee highlighted in its report. This can "adversely affect" the modernisation process of the forces, it said.
Capital expenditure is a crucial factor as Indian forces not only need modern weapons and other equipment but also critical infrastructure.
Rising Pakistan-sponsored terror activities and frequent border skirmishes with China require Indian forces to ramp up their might. The Doklam conflict with China which raised fears of a war brought to the fore the need for India to better guard its borders with China.
Over three years to 2017-18, there was a 9% decline in budget allocation for capital investments against requirements. This could delay procurement and modernisation of the armed forces, says the committee report.
There has been a steady decline from 3.18 per cent of GDP spent on defence in 1988 to half of that at 1.58% of GDP against a global standard of 2-2.5 per cent. In comparison, China spends 2.1 per cent and Pakistan 2.36 per cent.
Defence outlay has seen a consistent slip under the current government since its first budget presented for the 2014-15 fiscal.
In his Budget speech, Jaitley did not even mention the defence outlay though he did feel grateful to the armed forces and also announced a few defence-related proposals.
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