The biggest user of defence funds, the Army, appears to be set to return around 50 per cent of the allocation meant for capital purchases.
Normally, by the end of December, the armed forces are expected to finalise their capital expenditure proposals and also project the next financial year's requirement to avoid having to surrender funds.
As sometimes it is not possible because of long gestation periods for the forces' capital expenditure and complicated procedures, the previous government had proposed a revolving fund meant only for the surrendered portion of the capital allocations for the Services.
But that fund was shot down by the United Progressive Alliance (UPA) government when it came to power.
Earlier this week, Defence Minister Pranab Mukherjee held a meeting where the Army, which has the largest quantum of money allocated for capital expenditure, was berated for lack of planning, under-use of allocated budgetary grants and tardy clearance of weapons' acquisition projects.
According to indications, while the Air Force and the Navy may return only small amounts, the Army is likely to surrender 50 per cent of its budget allocated for the capital expenditure.
As the pattern in the defence budget since the UPA came to power is that defence gets only as much as it can spend, there is likely to be a severe cut in the Army's capital allocation in the forthcoming Budget. The utilisation was 63 per cent last year. Under the new finance ministry directive, no ministry can spend more than 33 per cent of total funds allocation for the year in a quarter to prevent bunching of expenditure.
Annoyed at the delay in clearance of the modernisation programme, the minister, sources said, told the Army brass to sort out differences across the table in a definite time frame to avoid delay in weapons induction and other major modernisation programmes.
Mukherjee, sources said, also voiced his anger at the delay in replying to queries raised by MPs on major defence issues. According to sources, the Army's revenue expenditure has also been under-used. This is inexplicable as salaries and pensions are the only heads under revenue expenditure. It was a matter of personal pride for the defence minister that in last year's Budget the forces were able to spend all the money they had been allocated.
This happened for the first time in five years, last year.
So far the defence ministry has cleared only two major defence deals for purchase: the French Scorpene submarines and the purchase of three aircraft from Boeing for the prime minister and the President.
