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Govt to Defence Services: 'No urgent need for money'

August 02, 2018 12:07 IST

Defence already accounts for one-third of the national capital spend, the government says.
Ajai Shukla reports.

IMAGE: The defence capital budget has already been increased from Rs 915.79 billion in 2017-2018 to Rs 995.63 billion in the current year -- a rise of 8.72 per cent. Photograph: Ahmad Masood/Reuters

Traditionally, the government has measured defence allocations as a percentage of gross national product, or as a share of total government spending.

In recent years, the total defence budget, inclusive of pensions, has been slightly over two per cent of gross domestic product and 16 to 18 per cent of government expenditure.

But now, the government has put forward in Parliament a new, and more telling, metric, which is the defence capital allocation as a percentage of the national capital spending.

Facing pressure to increase the capital budget, which buys new weapons and equipment, the government is arguing that defence already accounts for one-third of the national capital spend.


A defence ministry written response, tabled in Parliament on Wednesday, August 1, stated that the defence capital budget had already been increased from Rs 915.79 billion in 2017-2018 to Rs 995.63 billion in the current year -- a rise of 8.72 per cent.

'Significantly, the capital allocation for the ministry of defence in the current fiscal year is 33 per cent of the total central government expenditure on capital account and the total defence budget is 16.6 per cent of the central government expenditure,' Minister of State for Defence Subhash Bhamre stated.

Senior defence ministry officials have said it is meaningless to evaluate defence spending as a percentage of GDP, since the bulk of that figure is in the informal economy and outside the tax pool.

These officials argue that defence revenue expenditure -- with the bulk of it spent on salaries, pensions and running costs -- is a fixed liability.

Only in capital allocations does the government have the leeway to increase or decrease defence spending.

And with the military already the highest recipient of capital expenditure, there is little scope for allocating significantly more.

Nor does the defence ministry believe there is an urgent need to allocate more money to defence modernisation.

'There is adequate stocks of arms and ammunition with the armed forces who are well equipped for meeting any operational requirements,' Dr Bhamre said, responding to another question.

'In the last three financial years (2015-2016 to 2017-2018), 58 contracts worth about Rs 117,656 crore were signed with foreign vendors for procurement of defence capital equipment for defence forces,' said a defence ministry response, elaborating that these vendors are from Russia, Israel, the US and France.

An analysis indicates that, while capital allocations to defence have held steady as a proportion of the national capital spend, defence allocations as a whole have declined over the last three years.

From 17.8 per cent of government spending in 2016-2017, defence was allocated 16.9 per cent last year and 16.6 per cent in the current fiscal.

As a percentage of GDP, defence spending declined from 2.2 per cent to 2.16 per cent during the same period.

Ajai Shukla