All quiet on the front, mirage of funds located

BUDGET & THE ECONOMY

DEFENCE: The capital outlay for the 2007-08 Budget was Rs 41,922 crore, while the amount spent was Rs 37,705 crore. This itself amounts to 10.05 per cent.

The defence budget for 2008-09 was up 10 per cent at Rs 1,05,600 crore from Rs 96,000 crore last year, but as the armed services had to return Rs 4,217 crore unspent, in real terms, there was no increase in the size of the defence budget.

The capital outlay "" money allotted for procurement of equipment "" is the crucial element in the defence budget. Complex procurement procedures result routinely in the services returning money. The only exception to this was 2005, when Pranab Mukherjee was the defence minister.

The capital outlay for the 2007-08 budget was Rs 41,922 crore, while the amount spent (revised estimate) was Rs 37,705 crore. This, itself, amounts to 10.05 per cent.

Nevertheless, this year's capital outlay is, at Rs 48,007 crore, up by a healthy 27 per cent over the budget estimates in 2007-08. In absolute terms, the capital outlay has been increased by Rs 10,000 crore.

All the three services share the blame for not being able to spend the money they were allotted for capital expenditure. The Navy was allotted Rs 430 crore for construction in 2007-08, but was able to spend only Rs 283 crore. It was allotted Rs 1,965 crore for aircraft, but was able to spend only Rs 400 crore.

The Army got Rs 2,935 crore for construction, but spent only Rs 2,826 crore. It was also allotted Rs 6,616 crore for other equipment, but was able to spend only Rs 5,676 crore.

The Air Force has also been able to spend capital allocations for other equipment: It was given Rs 5,604 crore in 2007-08 but was able to spend only Rs 3,761 crore.

The 'return' syndrome has also hit the capital expenditure on account of the ambitious Ex-servicemen's Contributory Health Scheme, for which an allocation of Rs 57 crore was made, but what was spent was just Rs 14 crore.

This comprises medical equipment, the procurement of which has to be sanctioned by the defence ministry, involving bureaucratic and procedural delays.

The size of the revenue allocations to the Army "" mostly pay and allowances "" amounts to Rs 36,270 crore, Rs 7,421 crore to the Navy and Rs 10,855 crore to the Air Force. Research and development gets Rs 3,393 crore, up from Rs 3,186 crore in the 2007-08 budget.