The Ministry of Defence is working on a new budget model that is based on a futuristic five-year vision for critical military procurement that will allow the forces to use funds more efficiently and also enhance capital expenditure, top sources in the defence establishment said.
There is a view that instead of the allocation being done on per centage of the GDP annually it should be done on a five-year modernisation plan.
The current defence budget of Rs 3.18 lakh crore sanctioned by the NDA government after it came back to power earlier this year is 1.6 per cent of the GDP which is said to be the lowest in many decades.
The fluctuations in GDP affect the budget of the defence forces not allowing them to put in place a modernisation plan with a vision.
Sources said that Defence Minister Rajnath Singh has asked the forces to give their five-year requirements to make an assessment of the future budget allocation for the period.
It is being discussed at various levels and consultations are on for a five-year budget model, said a senior official in the defence establishment.
This will ensure better utilisation of funds and also ensure that there is no lapse of funds at the end of the year and it can be used over a period of five years. It will also enhance the efficiency in procurement, the official added.
In the current budget allocation out of Rs 3,18,931.22 crore allocated for the financial year 2019-20, Rs 2,10,682.42 crore is for revenue expenditure that takes care of salaries and maintenance of establishments, the remaining Rs 1, 08,248.80 crore for capital expenditure to buy military equipment and latest armoury.
Sources say with a five-year plan the capital expenditure allocation can also be higher that allow speeding up of critical procurement.
The current budget allocation has little scope for a leap as far as modernisation of armed forces is concerned as capital expenditure meant for big ticket procurement did not increase to match the requirements to transform the forces with modern equipment.
The capital allocation will only take care of the committed liabilities, which in effect means making payments towards purchases already finalised. This means the amount will not be enough to make new purchases, said an official.
While the Air Force needs to replace its ageing fleet of fighter jets and is looking for 114 aircraft beyond the 36 Rafale jets, the Navy needs to enhance its capabilities by adding more submarines and aircraft carriers. The army’s modernisation plans are also slow-paced to bring in latest weapon systems and ammunition.