Home DEFENCE Defence Budget 2021 – marginal increase, not sufficient to cover inflation

Defence Budget 2021 – marginal increase, not sufficient to cover inflation

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The Supreme Comander of Armed Forces President, Ram Nath Kovind at the ‘At Home Reception’, on the occasion of the 72nd Republic Day Celebrations, at Rashtrapati Bhavan

The Defence Budget this year has been increased this year from 4.71 Lakh cr to 4.78 Lakh cr. This is a paltry increase not even sufficient to cover inflation. It is in consonance with the trend of recent years, i.e. ever declining allocation as a percentage of GDP.  One hopes that the Government will provide the required additional resources should the situation on the borders warrants.

Within the Defence budget, the outlay for Capital acquisitions has been increased from 1.13 Lakh crore to 1.35 Lakh crore — an increase of approx. 19%.  Whether this will not further squeeze the Revenue component and endanger the smooth continuation of operation and maintenance activities, remains to be seen. It is pertinent to note that the capital acquisition plan of the Forces is not really affected due to the high revenue and Pension expenditure, as is the popular narrative, but actually due to the ever-declining Defence budget allocation in real terms, excluding inflation, as also the proportion of increased GDP not being passed on to Defence. The pension budget and certain operational and maintenance expenditure are in the nature of a fixed cost and have to be borne every year, thus compressing allocation for capital expenditure given the declining Defence budget in real terms. It is definitely not due to the bogie of Pension expenditure which is just a red herring.

Finally, the Government has to decide the optimum allocation for defence, given the existing security scenario and competing demands of health, education and infrastructure segments. Of course, measures can be taken to streamline the pension budget by implementing the lateral absorption scheme and enhancing the retirement ages of personnel from Services/Engineering support streams.  The former measure has not been implemented by successive Governments despite recommendations of every Pay Commission.

However, it is not kosher to deflect the issues by solely blaming the Pension and Revenue budget for inadequate allocation for modernization of forces over the years. The sooner real issues are identified the better.

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Lt. Gen. K K Aggarwal, AVSM, SM, VSM
Lt Gen Kapil Aggarwal retired as Director General Corps of Electronics and Mechanical Engineers (EME). A Post Graduate from IIT Kharagpur, Gen Aggarwal was Commandant Military College of Electronics and Mechanical Engineering (MCEME) Secunderabad which conducts post-graduate technical training courses in Mechanical, Electronics, Communication, Microwave and Computer Engineering. He also served as Chairman Army Pay Commission Cell, providing the inputs required by the 7th Pay Commission which articulated the pay, allowances and pension of approx. 12 lakh personnel in different rank, grade and trades. Gen Aggarwal also served as Technical Adviser to the Government of Mauritius – for close to three years.

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