Modi Govt. increases India's Defence Budget by 10 per cent



Despite rapidly expanding military prowess of China and an perpetually belligerent Pakistan, the Narenda Modi-led Government on Wednesday maintained a ‘small’ hike of 10 per cent which converts to about 6.2 per cent in actual terms in defence spending and announced an allocation of Rs 2.74,114 crore ($40.31 billion) for the fiscal 2017-2018.

The budget includes a capital outlay of Rs 86,488 for new equipment, weapons, aircraft, naval warships, Army vehicles. This is a 9 per cent hike over the this years capital at Rs 78,586, indicating that the government will on its path of adding new weapons. Notably, Rs 6686 crore was unspent in this year and the spending was reduced in the revised estimates.

The overall hike works out to be about Rs 15,525 crore over the budgetary allocation for the ongoing fiscal (ending March 31) that was Rs 2,58,589 crore. This sum does not include the pensions bill which itself is close to Rs 85,000 per annum.

India’s budget will be just about 26 per cent of China which is spending at $155 billion during its own fiscal year that ends almost the same time as India’s. Though the expense of the MoD will account for 9 per cent of all government spending, it leaves India ‘gasping for breath’ to catch up with its neighbour China.

The US has okayed a budget of $618 billion for this year, while Japan has passed a budget of US $43.6 billion for the year. Both have hiked the budget allocated for defence sector.

The Ministry of Defence has literally been weighed down by increased salaries and pensions — the expected effect of the Seventh Pay Commission and enhanced pensions after the one rank, one pension.

The allocation for new weapons, equipment and systems has been increased, but not the quantum jump that is needed to rapidly bridge the gap.

Union Finance Minister Arun Jaitley, who last year had not even mentioned the allocation for defence in his budget speech, this year mentioned the defence outlay.

Already India’s expenses on operations and maintenance are dropping, while expenses on salaries have risen.

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