Even at $45-bn defence budget, India military modernisation to suffer in 2021 fiscal

Photo: India’s Minister of Finance Nirmala Sitharaman with the budget papers before presenting it to parliament today.

New Delhi: India will spend Rs 323,053 crore ($45.2 billion) on its armed forces from April 2020. The defence allocation for the year 2020-21 has been set at just 1.43 per cent of India’s GDP, one of the lowest in the recent years, as has been the trend under the Narendra Modi government.

This is a nominal Rs 6,767 core ($950 million) more than what it got under revised allocations and about Rs 17,757 crore (2.48 billion) over last year’s budget. This is again one of the lowest hikes in real terms for defence in the recent years.

With this, the plans of the armed forces for modernising their weapons and equipment with new acquisitions can take a backseat for the next fiscal at least.

In a tell-tale sign of how this defence budget is perceived, India’s Minister of Defence Rajnath Singh had not a single word to say about the allocation for the armed forces in his eight-paragraph statement on the annual budget itself. The statement came in the form of a text message to the media from the ministry’s official spokesperson.

File Photo: India’s defence minister Rajnath Singh

Of this year’s budget for defence, the Modi government has earmarked Rs 113,734 crore (nearly $15.9 billion) for procurement of new weapons and equipment, apart from building capabilities for the armed forces. That’s a mere Rs 3,339.69 crore ($467 million) more than the revised estimates for the fiscal 2020.

The rest Rs 209,319 crore (over $29.3 billion) will go towards revenue expenses, which is usually for meeting recurring expenses such as on maintenance of infrastructure, replenishment of existing weapons and equipment, and for capacity building. In the 2020 fiscal, under revised estimates, the government has given Rs 205,901.76 crore ($28.79 billion) for revenue expenses.

In the 2021 fiscal, the government will also be spending another Rs 14,500 crore ($2 billion) on civilian establishments within the Ministry of Defence, and Rs 133,825 crore ($18.7 billion) on pensions for the retired armed forces personnel numbering nearly 2.5 million across India.

The government has allocated Rs 32,392.38 crore ($4.5 billion) for meeting the Indian Army‘s capital expenses, of which Rs 4,000 crore ($560 million) has been earmarked for buying military aviation assets for the land forces.

The Indian Army is already in the process of acquiring six Boeing Apache gunships and is negotiating the purchase with the global vendor under a follow-on order for the 22 Apaches bought by the Indian Air Force.

The Indian Navy has got Rs 26688.28 crore ($3.73 billion) for new purchases, of which it is expected to spend Rs 12,746 crore ($1.78 billion) for building its naval fleet.

The Indian Air Force has got lesser capital allocation for the next fiscal at Rs 43,281.91 crore ($6 billion), which is already Rs 1,587.23 crore ($222 million) less than the current fiscal’s revised estimates. A major chunk, Rs 26,909.88 crore (3.76 billion), will go towards aircraft and aeroengine purchases in 2020-21.

The Modi government had in 2016 ordered 36 Rafale combat jets from France and the deliveries of the aircraft began last October. The budget for the aircraft will go towards committed liabilities such as the Rafale purchase.

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