At a time when military budgets are facing a squeeze worldwide, India on Saturday marginally raised its defence spending with finance minister Arun Jaitley announcing an outlay of Rs 2,46,727 crore for 2015-16, an increase of 7.7% over the current year’s budgetary estimates and 10.95% if calculated against revised estimates.
The defence ministry surrendered Rs 6,630 crore out of last year’s defence outlay of Rs 2,29,000 crore in a year that did not see any major deal being sealed.
This year’s defence spending includes Rs 94,588 crore for buying new weapons and equipment, a jump of merely Rs 5 lakh over last year’s capital expenditure.
Budget documents show the ministry was unable to spend Rs 12,622 crore out of Rs 94,587.95 crore allocated for modernisation last year, with Rs 5,992 crore bring diverted for revenue spending on day-to-day expenses.
There are fears the marginal hike in spending may cramp India’s military modernisation effort, centered around buying new fighter planes, submarines, helicopters, missiles and artillery guns. Former IAF chief Air Chief Marshal Fali Major said, “I was expecting only a marginal hike as the economy is under pressure.”
In his budget speech, Jaitley said the government was pursuing the Make in India policy to become self-reliant in the defence sector. “So far, we have been over dependent on imports, with its attendant unwelcome spin-offs.” He added the government had permitted FDI in defence to enable Indian-controlled entities to become manufacturers and exporters of military hardware.
Veterans were disappointed as the there was no mention of their longstanding demand for one-rank, one-pension (OROP). The NDA government had set aside Rs 1,000 crore for OROP last year, but it is yet to be implemented.
India’s defence budget has slipped to 1.74% of its gross domestic product (GDP), compared to 1.78% last year. Experts believe India’s military spending should be around 3% of the GDP to counter China’s rapidly growing military might.
The country’s defence budget pales before China’s military spending of Rs 7,92,000 crore (2014-15). Beijing, which vastly under-reports its military spending, is expected to announce its defence budget for 2015-16 in March.India’s defence spending averaged 1.59% of the GDP from 1947 to 1962, the year India fought a war with China. The country sustained a defence spending of 3.1 % of the GDP between 1963 and 1988, but it has hovered below 2% in recent years. India’s military spending currently stands at 13.88% of total government expenditure.