Don’t look at the headline defence allocation numbers. The most important segment of the defence budget, the outlay for capital expenditure, has been increased 18.7 per cent to enable the armed forces acquire the latest weaponry it needs to tackle a possible two-front threat against China and Pakistan.
The border stand-off with China shows no signs of winding down. As many as 50,000 Indian troops are stationed on the Line of Actual Control (LAC) in sub-zero temperature to deter any Chinese misadventure. This is entailing a huge cost on the country and telling upon the country’s defence budget.
Analysts were expecting a steep increase in the defence outlay in Finance Minister Nirmala Sitharaman’s third Budget. They were not disappointed as the most critical segment of the defence budget, the allocation for capital expenditure, has been increased 18.7 per cent to $18.4 billion for 2021-22 compared to $15.5 billion during the current year.
If, however, one were to consider the emergency purchases made during this year – of SiG Sauer assault rifles, Spike anti-tank guided missiles, Spice-2000 bombs, spares for heavy platforms like fighters and tanks, and winter clothing, tents, etc. – at a cost of about $2.75 billion, then the defence acquisition budget for the coming year remains at more or less the same level as this year.
Strategic affairs expert and CEO and Editor-in-Chief of BharatShakti.com and Stratnews Global.com Nitin Gokhale told India Global Business that it was better to allocate sums the military forces could actually deploy rather than set over-ambitious expenditure targets that are not met, resulting in the funds lapsing.
He added: “The increased allocation for capital outlay will help the armed forces modernise fast. If similar 15 per cent increases can be sustained for a few years, it will help the Indian armed forces meet most of its acquisition targets.”
India will need every dollar of that allocation. It is in the midst of a massive military modernisation programme, which includes plans to induct at least 200 additional fighter jets, hundreds of combat and utility helicopters, transport planes, howitzers, several submarines, one and maybe two aircraft carriers, hundreds of thousands of assault rifles and close quarter carbines and other sophisticated weapons for its 1.4 million strong armed forces.
Gokhale said it was good that the Indian Navy has received the largest share of the capital budget, followed by the Indian Air Force and then the Indian Army.
Indian military planners want to be ready to face a possible collusive threat from China in the north and Pakistan in the west, effectively forcing the Indian military to fight a two-front war.
Defence Minister Rajnath Singh expressed happiness with the allocation to his department. "I specially thank PM and FM for increasing the defence budget to 4.78 lakh cr (66 billion) for FY21-22 which includes capital expenditure worth Rs 1.35 lakh crore ($18.4 billion). It is nearly 19 per cent increase in Defence capital expenditure. This is highest ever increase in capital outlay for defence in 15 years," Singh tweeted.
The overall defence budget, minus the allocation for pensions and arrears, has been increased 7.4 per cent to $49.6 billion for 2021-22. Another $16 billion will be spent on pensions.
The Defence Research and Development Organisation (DRDO), which is leading several cutting edge projects, including the HAL Tejas LCA, the Advanced Medium Combat Aircraft (AMCA), swarm drones, and the use of artificial intelligence and machine learning for military purposes, among several others, has seen its allocation rise 8 per cent to $1.5 billion.
And the Border Roads Organisation (BRO), the specialist entity tasked with building roads and other infrastructure along India’s contested borders with China and Pakistan has been allocated $750 million, an increase of 7.5 per cent over the current year.
Meanwhile, the 15th Finance Commission has recommended the creation of a $33-billion non-lapsable fund for defence modernisation, the panel said in a statement Monday.
“The Union Government may constitute in the Public Account of India, a dedicated non-lapsable fund, Modernisation Fund for Defence and Internal Security (MFDIS),” a statement from the Commission said. The fund will be for available over the 2021-26 period.
“This is still a proposal. But if it is implemented and becomes a policy, it will ensure that the Indian military will face fewer budgetary constraints when planning for modernisation of the armed forces,” said Gokhale.