India on Monday announced it would spend Rs 2.58 lakh crore on defence in 2016-17, a marginal hike of 9.7% over last year’s revised estimates of Rs 2.33 lakh crore. The military spending does not include defence pensions that would take up the budget to nearly Rs 3.41 lakh crore compared to last year’s Rs 2.93 lakh crore.
The pension component of the budget is huge at Rs 82,332.66 crore, with the outgo towards implementing the one rank-one pension scheme contributing to the financial burden. The revised estimates for pensions stood at Rs 60,238 crore in 2015-16.
The allocation for military modernisation in the budget stands at Rs 87,209.63 crore.
If the hike in the defence outlay is calculated against the budget estimates of 2015-16, it works out to only 1.16%. Finance minister Arun Jaitley made no mention of India’s defence allocation in his Budget speech on Monday.
The defence ministry failed to spend Rs 11,595 crore of its capital budget earmarked for buying new weapons and systems last year, besides over Rs 6,700 crore of the expenditure budget remained unspent.
The budget for 2016-17, excluding pensions, accounts for 1.7% of the country’s gross domestic product. Experts believe India’s military spending should be around 3% of the GDP to counter China’s rapidly growing military might. If the pensions are counted, the allocation accounts for 2.2% of the GDP.
Experts feel that the funds made available to the armed forces may not be sufficient to power critical modernisation programmes. India’s modernisation effort centres around buying new fighter planes, building next-generation submarines, helicopters, missiles and artillery guns. Strategic affairs expert Brigadier Gurmeet Kanwal (retd), said, “I don’t think there’s been a hike at all in real terms. The rupee has fallen against the dollar from 62 to 69. Also, inflation in prices of weapon systems can be around 15%.” Officials said 86 deals worth close to Rs 1,50,000 crore were nearing the final stage of approval.
This year’s defence spending includes a revenue expenditure of around Rs 1.68 lakh crore for meeting the military’s day-to-day expenses.
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 remained under the 2%-mark for several years now.
A report released by the Stockholm International Peace Research Institute last week showed that India had once again topped the list of the largest weapons importing countries in the world, accounting for 14% of global imports.
China and Pakistan rank second and fourth on that list with their imports accounting for 4.7% and 3.3% of the global figure during 2011-15. India’s imports increased by 90% between 2006-10 and 2011-15, the report said.