The hike in capital expenditure — from ₹1.13 lakh crore to ₹1.35 lakh crore — was one of the highlights of the Budget. It has gone up by almost 19% at a time when India is planning to buy new fighter jets, medium transport aircraft, light combat helicopters and surface-to-air missiles.
India spent ₹20,776 crore on the emergency purchase of weapons and systems to beef up its military capabilities to deal with new security challenges in the midst of a lingering border dispute with China in eastern Ladakh, where both armies have deployed a total of 100,000 soldiers and advanced weaponry in their forward and depth areas, Budget documents showed on Monday.
The money spent on building capabilities was over and above the budget allocation for modernisation last year. India earmarked ₹1.13 lakh crore as capital expenditure in Budget 2020-21 but revised estimates in the new budget, presented in Parliament by finance minister Nirmala Sitharaman, show the military ended up spending ₹1.34 lakh crore on modernisation.
The border conflict with China forced India to speed up the purchase of smart air-to-ground weapons, missiles, rockets, air defence systems, GPS-guided artillery ammunition, tank ammunition and assault rifles. The United States, Russia, France and Israel are among the countries from which India imported weaponry last year.
The increase in capital expenditure — from ₹1.13 lakh crore last year to ₹1.35 lakh crore — was one of the highlights of Budget 2021-22. It has gone up by almost 19% at a time when India is planning to place orders for new fighter jets, medium transport aircraft, basic trainer aircraft, light combat helicopters, surface-to-air missiles and loitering weapons systems.
The allocation under the capital head has been significantly increased, the defence ministry said in a statement. “The allocation represents an increase of 18.75% over FY 2020-21 and 30.62% over FY 2019-20. This is the highest ever increase in capital outlay in the last 15 years,” the ministry said.
An 18% increase in budgetary allocation for capital procurement goes some way in recognising the urgent need of modernisation and weapon enhancement requirements of the armed forces, said Anuj Prasad, head (aerospace and defence), Cyril Amarchand Mangaldas.
“Given that capital procurement expenditure for the previous year exceeded the budgetary allocation by more than ₹20,000 crore, a lot more needed to be done given the current geopolitical scenario and the glaring gaps in military preparedness,” he said.
Overall, India has set aside ₹4.78 lakh crore for military spending in its budget for 2021-22, compared to last year’s ₹4.71 lakh crore — both figures include defence pensions. This translates into an increase of 1.45%.
But if defence pensions are not taken into account, this year’s military spending stands at ₹3.62 lakh crore, compared to ₹3.37 lakh crore last year — an increase of 7.3%. Budget documents show that the government’s defence pension bill will be lower than last year – down from ₹1.33 lakh crore to ₹1.15 lakh crore. Last year it was higher as ₹18,000 crore was paid out as pension arrears, officials said.
Briefing reporters, Sitharaman said the government agreed in-principle to provide a non-lapsable fund for defence for the first time in line with a recommendation made by the 15th Finance Commission. This will help military modernisation as unspent funds will not have to be returned at the end of the year.
This year’s allocation includes ₹2.12 lakh crore for revenue expenditure, compared to ₹2.09 lakh crore last year.
This year’s budget (excluding pensions) is a 1.62% of the country’s gross domestic product. If defence pensions in the budget are taken into account, the budget accounts for 2.14% of the GDP.
The defence budget (excluding pensions) is 10.4% of the government’s total expenditure for 2021-22. If pensions are counted, it is 13.72% of the total expenditure.