Budget 2016: Despite Modi's nationalistic rhetoric, Jaitley has disappointed defence sector - Firstpost
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Budget 2016: Despite Modi's nationalistic rhetoric, Jaitley has disappointed defence sector

By Prakash Nanda

As a student of Indian strategic affairs for many years, I do not recall a single year when the Finance Minister of India has not mentioned allocations for the defence ministry in his annual budget speech. The absence of any mention of defence in this year's budget makes Arun Jaitley unique in that sense. In his budget proposals for the year 2016-17 in Parliament on Monday, Jaitley did talk of the extra burden that the nation has to bear for the implementation of the Seventh Pay Commission Report and One Rank One Pension (OROP) for the defence forces. But then the fact remains that pensions do not constitute a part of the defence budget.

But what is more surprising is that not only did Jaitley fail to mention the defence ministry in his speech, but his ministry also went one step further in removing the Ministry of Defence (MoD) from the list of "important ministries" in highlighting the budget proposals in its press releases. And this was all the more surprising, given the fact that Jaitley was the first defence minister of this government when it was formed in 2014 after Prime Minister Narendra Modi's mammoth electoral victory. Besides, we have a prime minister who takes great pride otherwise in nationalism and talks of making India a great military power.

Representational image. Reuters

Representational image. Reuters

However, realistically speaking, one should not be surprised. As this writer had mentioned in the very first article in this series, with Indian GDP growing at about seven percent over last year and given the global recession, no government, let alone the one led by Modi, would have been able to go for a substantial hike in Indian military expenditure. In that sense, the Modi government has kept the past trend of a nominal increase in budgetary allocations for the defence. But in doing that, it has made some changes in the method of allocations this year.

Traditionally, there have been six headings of defence budget: Army, Navy, Air Force, Defence Research and Development Organisation (DRDO), Ordnance Factories (OF) and Civilians (working along with the forces). This time what Jaitley has done is that he has clubbed DRDO, OF and Civilians under the heading 'Defence Misc' and the three services under the heading 'Defence Services'. For the first category, Jaitley has provided Rs 1,18,465.84 crore whereas for the three services he has allocated Rs 2,22,456.14 core. If one adds the two, we have total figure of Rs 3,40,921.98 crore for defence in this year's budget. This is thus an increase of Rs 94,204.98 crore over the last year's budget which stood at Rs 2,46,727 crore. It is a considerable increase in terms of percentage.

However, as has been the case over the last years, this time too the Revenue heading takes the giant share in the budgetary allocations. Under the 'Miscellaneous' heading, the revenue side is Rs. 24,510.23 crore as against the capital front's Rs 11,622. 95 crore. The total allocation thus is Rs. 36133.18 crore, out of which, and this is significant to note, the planned expenditure will be only Rs. 450 crore, the rest of the Rs 3,56,83.18 earmarked for 'non-plan' expenditure. In other words, one can say for research and development, so vital for the success of DRDO, there is not enough money.

As regards the three services, the same is the case. The revenue head is Rs 1,43,869.46 crore and the capital head is Rs 78,586.468 crore. Army, as usual has got the lion's share, followed by the Air Force and the Navy. Army's revenue expenditure stands at Rs 1,02,788.84 crore, out of which as much as Rs 67,721.78 crore will be spent on pay and allowances only. The Navy's revenue head reads Rs.17424.79 crore (salary and allowances will take Rs 5,272 core) and that of the Air Force at Rs 23,655.83 crore (salary and allowances will cost Rs 12,072.53 crore).

Let us see now the capital expenditures so vital for the modernization of our armed forces. Obviously, the expenditure is not enough. The Air Force which is terribly underequipped as far as the fighter squadrons are concerned, has been allotted a meager sum of Rs.17833 crore for acquisitions of new aircraft. And the Navy also has been allocated a negligible sum of Rs.12467 core for adding to its fleet. For other items on capital expenditure for three services, such as land, construction, medium and heavy vehicles and other equipment, there is nothing significant in this budget to mention.

Overall, much against the wishes for their respective capacity enhancement, the three services have been badly let down by the finance minister, particularly when the inflation for military equipment in the global market every year is 12 to 15 percent and there is a sharp fall in the value of the rupee against dollar, the international currency.

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