A parliamentary panel has asked the defence ministry to “strongly press” for additional funds from the finance ministry to enable the military to buy new equipment and also pay for weapons and systems it has already contracted to purchase, at a time when the armed forces have projected a combined requirement of almost Rs 1 lakh crore more under the capital head for 2019-20.
In a series of reports on demands for grants of the defence ministry for 2019-20, the Parliamentary standing committee on defence on Monday underlined the need to provide adequate budgetary support to the armed forces for powering different modernisation programmes and also pay for committed liabilities or procurements already made in the previous years.
India’s defence budget for 2019-20 stands at Rs 3.18 lakh crore. This includes a capital outlay of just Rs 1,03,394 crore that is not enough to upgrade capabilities and more money is required to avoid a funding crisis, said three senior military officers asking not to be named. The additional money sought by the army, navy and air force almost equals this year’s capital expenditure.
Measured against the country’s GDP, India’s defence spending currently stands at around 1.5% of the GDP, the lowest in decades. Several experts have argued that India should spend 3% of its GDP to build military capabilities to counter a combined threat from China and Pakistan. In written submissions to the parliamentary panel, the defence ministry said the requirements projected by the three services had been forwarded to the finance ministry for “favourable consideration”.
“While allocating funds, the ministry of finance analysed past absorption capacity of the services and the pace of expenditure in the current financial year. The committee understood that if this logic was applied, there was no reason not to allocate requisite budget for the forces as for the past few financial years they had been able to fully utilise the funds allocated to them at the revised estimates stage,” the panel said.
The armed forces have so far spent over 90% of funds on modernisation and committed liabilities, said the first senior officer. “Under the defence services estimates, committed liabilities constitute a significant element in respect of the capital acquisition segment, since one project may span several financial years. As such, it is important to track the element of committed liabilities, which hold first charge on budget allocation. The committee found the shortage baffling, as these are payments towards procurements made in previous years,” the panel said, recommending that allocation as promised should be disbursed for committed liabilities. On December 3, navy chief Admiral Karambir Singh highlighted that the navy needed funds for pursuing modernisation programmes as its share of the defence budget had declined from 18% to 13% during the last five years. The capital expenditure of Rs 23,156 crore earmarked for the navy isn’t sufficient to meet requirements and the service needs at least Rs 20,000 crore more, said the second officer.
Likewise, the capital expenditure of Rs 39,300 crore earmarked for IAF in this year’s budget is not enough and it requires an additional Rs 40,000 crore to upgrade capabilities, he added.
The army is seeking additional funds as the Rs 29,461 crore earmarked for the force fall short of its needs, said the third officer. Experts agree that the military needs more money. “A higher outlay is necessary for the armed forces to start becoming future-ready. While it is axiomatic that this will need more capital funding, the services too need to invest these and future funds more imaginatively,” said military affairs expert Rear Admiral Sudarshan Shrikhande (retd).