Union Budget 2017: Defence budget up over 6.2% at Rs2.74 trillion

New Delhi. Finance minister Arun Jaitley increased the defence budget for the coming fiscal year by 6.2%, pressing ahead with India’s push to modernise its armed forces.

Jaitley provided Rs2.74 trillion for defence expenditure, excluding payment of pensions, up from Rs2.58 trillion in the current fiscal. The sum includes Rs86,000 crore for defence capital expenditure, Jaitley said in his budget speech.

The National Democratic Alliance (NDA) government has set great store by modernisation of the armed forces since it took office in 2014. With $51.3 billion of spending in 2015, India had a 3.1% share of the collective expenditure by 15 countries with the highest military budgets, according to the Stockholm International Peace Research Institute (SIPRI). US, China, Saudi Arabia, Russia and the UK were the top five.

“The increased allocation towards capital expenditure in defence budget is a welcome move. It shows the government’s commitment towards indigenisation,” Puneet Kaura, managing director and chief executive officer of Samtel Avionics, said in a statement.

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“The increased spend by the government on capex will lead to trickle down effect and more work for SMEs (small and medium enterprises). It will further help in defence and fleet modernisation. It will also boost ‘Make in India’ in defence,” he added.

The defence capital budget represents an approximately 10% increase, said Ankur Gupta, vice president (aerospace and defence) at EY India.

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“But if we consider the impact of the depreciating Rupee and the imposition of customs duty on all defence imports, this increase may not suffice to meet the modernisation requirements,” Gupta said.

Jaitley also announced the creation of a centralised defence travel system through which travel tickets can be booked online by soldiers and officers.

“Our defence forces keep the country safe from both external and internal threats,” Jaitley said, “They do not have to face the hassle of standing in queues with railway warrants.”

A web-based interactive pension disbursement system for defence pensioners will be established, he said.