The defence budget was increased by 6.87 per cent to Rs 3.18 lakh crore against last year's allocation of Rs 2.98 lakh crore, notwithstanding expectations of a major hike when China and Pakistan were bolstering their military capabilities.
Out of the total allocation, Rs 1,08,248 crore has been set aside for capital outlay for the year 2019-2020 to purchase new weapons, aircraft, warships and other military hardware. Last year, the government allocated Rs 93,982 crore as capital outlay.
The defence ministry said the total allocation of Rs 3,18,931 crore in defence budget is an increase of 6.87 per cent over revised estimate of Rs 2,98,418 crore for 2018-19.
The total outlay does not include Rs 1,12,079 crore set aside for payment of pensions.
"The allocation for capital expenditure is totally inadequate given the kind of modernisation our armed forces are envisaging," said Dr Laxman Behera of Institute of Defence Studies and Analysis.
Behera said the defence budget is around 1.44 per cent of the gross domestic product which, he called as 'insufficient' considering the evolving security situation in India's neighbourhood.
Presenting the interim budget for 2019-20 in Parliament, Union Minister for Finance and Corporate Affairs Piyush Goyal said additional funds, if necessary, would be provided to secure India's borders and maintain its defence preparedness.
"Our defence budget will be crossing Rs 3,00,000 crore for the first time in 2019-20. For securing our borders and to maintain preparedness of the highest order, if necessary, additional funds would be provided," he said.
Under capital outlay, the Army was granted Rs 29,447 crore, the Navy was given Rs 23,156 crore and the Indian Air Force got an allocation of Rs 39,302 crore.
The revenue expenditure which includes expenses on payment of salaries and maintenance of establishments has been pegged at Rs 2,10,682 crore as against Rs 1,88,118 crore for 2018-19.
Experts said Goyal's budget was an interim budget and the allocation for defence forces may change when a full-fledged budget is presented by the new government after the Lok Sabha polls.
The defence ministry said the capital outlay for armed forces is 32.19 per cent of the government's total capital expenditure of Rs 3,36,293 crore. It said the total defence allocation including for funds for pensions accounted for 15.48 per cent of the total central government expenditure.
Earlier the Press Information Bureau pegged the defence budget at Rs 3,05,296 crore. But later, the defence ministry put the total allocation at Rs 3,18,931 crore.
Officials said the final amount of defence budget included funds set aside for Border Roads Organisation, Coast Guards and allocation made for payment of salaries and allowances to civil staff of the defence ministry.
In his budget speech, Goyal also referred to government's efforts to strengthen defence and national security and said due care will be taken of the soldiers who protect India's borders in tough conditions.
He said the issue of One Rank One Pension (OROP) which was pending for the last 40 years has been resolved.
"The previous governments announced it in three budgets but sanctioned a mere Rs 500 crore in 2014-15 interim budget. In contrast we have already disbursed over Rs 35,000 crore after implementing the scheme in its true spirit," he said.
He said the government also announced substantial hike in the Military Service Pay (MSP) of all service personnel and special allowances were given to naval and air force.