Though defence expenditure is up almost 10%, it is still only 2.5% of GDP.
The Defence budget for 2010-11 was pegged at Rs 147,344 crore, up 8 per cent from the revised estimates of Rs 136,264 crore and four per cent from the budget estimates of Rs 141,703 crore in 2009-10. The armed forces will thus get around Rs 11,000 crore extra in 2010-11.
Of the allocation, Rs 60,000 crore would go for capital expenditure – purchase of equipment – by the three services: Army, Navy and Air Force.
The difference between last year’s budget estimates and revised estimates for capital expenditure was because the three services were unable to utilise the allocated amount, this was returned. This year, Rs 7,000 crore was returned unutilised by the three services. The budget estimate for capital expenditure for defence last year was Rs 54, 824 crore. The revised estimate was Rs 47, 824 crore.
The armed forces have long argued that with defence inflation upwards of 10 per cent, capital outlays have to increase by over 10 per cent annually. This has taken place this year, when the increase is close to 30 per cent.
This year, revenue expenditure for the three services went down marginally, because payments on account of the 6th Pay Commission need not be made. For all three services, the revenue expenditure – payments towards pay and allowances – amounted to Rs 87,344 crore in 2010-11. Although last year the budgeted amount was Rs 81,288 crore, this amount went up to Rs 88,440 crore in the revised estimates. As the payments have been made, the revenue expenditure is less this year.
Last year, the government had provided a steep hike of 34 per cent for the defence services, working out to an increase of Rs 36,103 crore. The allocation continues to hover at a little over 2.5 per cent of the gross domestic product, though there have been suggestions to increase it substantially in view of the security situation. Most of India's neighbours allocate a higher proportion of GDP to defence.