 "Defence allocation down to about 1.65 % of GDP, lowest since the 1962 China war")
Every finance minister, while presenting the Budget, pays tribute to the military. He announces the defence allocation for the coming year - normally 15-20 per cent higher than the previous year - and then promises that the government will make available whatever more is needed for defending the country.
This year, Finance Minister Arun Jaitley's speech did not make even a token mention of the government's highest chunk of expenditure. The defence allocation, at Rs 2,49,099 crore, was only marginally higher than last year's Budget Estimates of Rs 2,46,727 crore. From this year's Revised Estimates of Rs 2,24,636 crore, the allocation shows a raise of a little more than 10 per cent, well below defence inflation, which normally runs at 15 per cent annually.
Meanwhile, revenue expenditure continues to rise. From Rs 1,43,236 crore in revised estimates of FY 2015-16, the allocation has been raised to Rs 1,62,759 crore, a hike of Rs 19,523 crore, or about 14 per cent. There is an apprehension that even this might not be enough, with the military facing a two-pronged pressure of growing manpower numbers and higher salaries when the Seventh Pay Commission is implemented.
In addition, the government will face financial pressure from implementing the One Rank, One Pension (OROP) award, although pensions are not included in the defence budget. From Rs 60,238 crore allocated for pensions in the Revised Estimates for the current year, FY 2016-17 will see Budget Estimates of Rs 82,333 crore - a rise of over 35 per cent.
Allocations for the three services on account of capital expenditure provide some indication of what contracts might be signed. The army is the big gainer, with its capital allocation up from Rs 18,486 crore to Rs 22,110 crore. This jump suggests the likelihood of artillery gun contracts being concluded, including the purchase of M777 ultralight howitzers from BAE Systems. The navy has been given a marginal raise, which suggests that its flow of new warships is likely to continue smoothly. Significantly, the Indian Air Force (IAF) allocations have been marginally reduced. This suggests the defence ministry is not expecting to sign a contract next year for the Rafale fighter - for which it would have to allocate about Rs 10,000 crore as the signing amount.
In terms of overall government spending, defence will consume about 12.6 per cent of the total spending, approximately the same as the current year's revised estimates. Defence is now down to about 1.65 per cent of gross domestic product, lowest since the 1962 war with China.
This continued downward trend indicates the government does not perceive any pressing national security threats, and has chosen to direct spending to social sectors instead.
This year, Finance Minister Arun Jaitley's speech did not make even a token mention of the government's highest chunk of expenditure. The defence allocation, at Rs 2,49,099 crore, was only marginally higher than last year's Budget Estimates of Rs 2,46,727 crore. From this year's Revised Estimates of Rs 2,24,636 crore, the allocation shows a raise of a little more than 10 per cent, well below defence inflation, which normally runs at 15 per cent annually.
Meanwhile, revenue expenditure continues to rise. From Rs 1,43,236 crore in revised estimates of FY 2015-16, the allocation has been raised to Rs 1,62,759 crore, a hike of Rs 19,523 crore, or about 14 per cent. There is an apprehension that even this might not be enough, with the military facing a two-pronged pressure of growing manpower numbers and higher salaries when the Seventh Pay Commission is implemented.
In addition, the government will face financial pressure from implementing the One Rank, One Pension (OROP) award, although pensions are not included in the defence budget. From Rs 60,238 crore allocated for pensions in the Revised Estimates for the current year, FY 2016-17 will see Budget Estimates of Rs 82,333 crore - a rise of over 35 per cent.
Allocations for the three services on account of capital expenditure provide some indication of what contracts might be signed. The army is the big gainer, with its capital allocation up from Rs 18,486 crore to Rs 22,110 crore. This jump suggests the likelihood of artillery gun contracts being concluded, including the purchase of M777 ultralight howitzers from BAE Systems. The navy has been given a marginal raise, which suggests that its flow of new warships is likely to continue smoothly. Significantly, the Indian Air Force (IAF) allocations have been marginally reduced. This suggests the defence ministry is not expecting to sign a contract next year for the Rafale fighter - for which it would have to allocate about Rs 10,000 crore as the signing amount.
In terms of overall government spending, defence will consume about 12.6 per cent of the total spending, approximately the same as the current year's revised estimates. Defence is now down to about 1.65 per cent of gross domestic product, lowest since the 1962 war with China.
This continued downward trend indicates the government does not perceive any pressing national security threats, and has chosen to direct spending to social sectors instead.