Are we setting aside enough for defence equipment?
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Defence is one of five ministry allocations being discussed in the Lok Sabha this year. For 2017-18, the defence allocation is Rs3,59,854 crore. This is 17% of the total central government budget, making it the largest allocation among central ministries.
According to the Stockholm International Peace Research Institute, in 2015 China spent about 2% of its gross domestic product (GDP) on defence ($215 billion), while Pakistan spent about 3% ($10 billion). In comparison, India spent 2% of its GDP, or $51 billion, on defence.
Expenditure skewed toward revenue items
In 2017-18, about 75% of the defence budget comprises revenue expenditure, which includes payments on salaries, pensions and stores (e.g., ammunition, spares and fuel). The remaining 25% is capital outlay—expenditure on defence equipment, machinery, weaponry, vehicles, aircraft, naval fleets and land.
The share of capital expenditure has come down from 33% in 2011-12, to 25% this year.
Underspending of capital allocations
Trends in defence expenditure indicate that defence services are not able to fully spend the capital allocations. However, their revenue expenditure overshoots budgetary allocations. This could be because salaries and pensions are committed liabilities of the government that cannot be defaulted on.
Further, about 90% of the allocations for capital acquisitions are spent on committed liabilities. Committed liabilities are payments made toward acquisition contracts signed in previous years. This leaves only a small part of the budget for planning new purchases in a given year.
There are significant shortages in defence equipment. For example, the Defence Acquisition Council has projected a need for 198 vessels and submarines for the navy by 2027, compared to the current strength of 121 vessels and 15 submarines. The air force has estimated the current need at 45 fighter squadrons, while it has 33.
Will the current budgetary allocations be enough to ensure the preparedness of India’s armed forces? The trends in defence expenditure seem to suggest otherwise.