The overall defence budget for 2021-22 was hiked marginally by around 1.4 per cent but there was a nearly 19 percent rise in capital outlay for military modernisation even as official data showed that an additional unbudgeted Rs 20,776 crore was spent to buy military hardware in the face of the Ladakh border standoff with China.
According to the 2021-22 budget documents presented by Finance Minister Nirmala Sitharaman in Parliament, the allocation for the Defence services was increased to Rs 4.78 lakh crore compared to Rs 4.71 lakh crore in the 2020-21 budget.
The budget documents showed that the revised capital expenditure for 2020-21 was pegged at Rs 1,34,510 crore as against last year's budgetary allocation of Rs 1,13,734 crore to reflect the additional expenses.
The Indian armed forces procured ammunition and weapons from several countries in the last few months following the military face-off with China that erupted on May 5.
According to the documents, a total of Rs 1,35,060 crore has been set aside for capital expenditure that includes purchasing new weapons, aircraft, warships and other military hardware.
The capital outlay for 2021-22 is an increase of 18.75 per cent compared to last year's allocation of Rs 1,13,734 crore.
In a tweet, Defence Minister Rajnath Singh thanked Prime Minister Narendra Modi and Sitharaman for increasing the defence budget to Rs 4,78,195 crore, and said the nearly 19 percent hike in the capital expenditure is the 'highest ever' increase in the last 15 years.
The defence minister also expressed happiness over Sitharaman's budget proposal to open 100 new Sainik schools.
The Rs 4.78 lakh crore budgetary outlay included an allocation of Rs 1.15 lakh crore for payment of pensions. Significantly, the allocation for payment of pension has come down as it was Rs 1.33 lakh crore in the previous budget.
The Defence budget comes to around 1.63 percent of the GDP.
Military experts said the drop in the allocation could be an indication of the government's plan to cut expenditure on payment of pension by increasing the retirement age of military officers.
However, officials later clarified that the allocation was more in 2020-21 as approximately Rs 18,000 crore was to be paid on account of pension arrears.
"Also salary and pension are based on actuals," said an official.
Excluding the pension outgo, the total revenue expenditure, which includes expenses on payment of salaries and maintenance of establishments, has been pegged at Rs 2.12 lakh crore.
The military experts expressed satisfaction at the overall allocation considering the coronavirus-triggered adverse impact on the economy, though they said India will have to gradually raise its defence spending to deal with increasing external threats.
"I am satisfied with the total allocation to the armed forces considering the state of the economy in view of the impact of the coronavirus pandemic," said Dr Laxman Behera, a noted defence expert.
He said the increase of around Rs 22,000 crore in capital outlay is a welcome move which will help the three services in carrying out with their modernisation drive.
'Nearly 20 percent increase in Capital Defence Budget is positive. Hope we will not see an overspend on the Revenue and Pensions,' tweeted former Chief of Army Staff Gen (retd) V P Malik.
He said another positive aspect was the assurance that the 'capital defence budget' will be non-lapsable as advised by the Finance Commission.
In the budget, the Army has been granted a capital outlay of Rs 36,481 crore as against Rs 33,213 crore in 2020-21, as per the revised estimates.
The allocation made to the Navy for capital expenditure is Rs 33,253 crore which was Rs 37,542 crore in the previous budget.
Similarly, the Indian Air Force(IAF) has been given Rs 53,214 crore to buy new platforms and weapons which is a drop of Rs 1,840 crore compared to the money it spent under capital expenditure in the current fiscal.
The budgetary capital outlay for the IAF for 2020-21 was Rs 43,281.91 crore but the revised estimate put the figure at Rs 55,055 crore.
'I specially thank PM & FM for increasing the defence budget to 4.78 lakh cr for FY21-22 which includes capital expenditure worth Rs 1.35 lakh crore.
'It is nearly 19 percent increase in Defence capital expenditure. This is the highest ever increase in capital outlay for defence in 15 yrs,' Defence Minister Singh tweeted.
The capital allocation for the Defence Research and Development Organisation (DRDO) has been pegged at Rs 11,375 crore which is an increase of eight percent over the amount earmarked in 2020-21.
The allocation for Border Roads Organisation (BRO) has been increased to Rs 6,004 crore which is 7.48 per cent more than the amount given in 2021-22.