The newly created Department of Military Affairs, headed by the Chief of Defence Staff General Bipin Rawat did not find any mention in either Union Finance Minister Nirmala Sitharaman’s speech, nor has it been mentioned as a separate subhead in the revenue outlay for the Defence Ministry.
Sitharaman, in fact, did not mention anything regarding allocation for the Defence Ministry, or the three forces, in her Budget speech on Saturday.
At Rs 3.375 lakh crore, defence allocation has seen a marginal rise compared to the budgeted estimates from last year of Rs 3.19 lakh crore, an increase of 5.6 per cent.
The hike becomes even smaller when compared to the revised estimates for 2019- 20 at Rs 3.31 lakh crore — a rise of just 1.8 per cent.
Capital outlay for the services has increased by 3 per cent — from Rs 1.104 lakh crore in 2019-20 to Rs 1.137 lakh crore. Capital outlay for the Army has increased from Rs 29,461 to Rs 32,392 crore; for the Navy from Rs 23,156 to Rs 26.688; and for the Air Force from Rs 39.302 crore to Rs 43,281 crore.
If revised estimates for last year are taken into account, capital allocation for the Air Force has, in fact, come down. The revised estimate for Air Force last year was Rs 44.869 crore, compared to Rs 43.281 crore this year.
The government has given the Defence Ministry in revenue outlay Rs 2.09 lakh crore this year, compared to Rs 2.02 lakh crore last year in Budget estimates.
The Defence Budget becomes much bigger if the allocation for defence pension is added to capital and revenue outlays. When included in the Defence Budget, the largest increase in allocation for defence has come for pension. It jumped by 18.75 per cent — from Rs 1.12 lakh crore last year to Rs 1.33 lakh crore in the Budget presented on Saturday. Put together, it pushes the Defence Budget to Rs 4.71 lakh crore. To push this allocation, and for the sake of predictability and stability for flow of funds for national security, the Finance Commission is contemplating setting up an expert group with representatives of Home, Finance and Defence ministries to come up with detailed modalities for either non-lapsable funds for national security, or to come up with an alternate mechanism.
Mentioned in its interim report for 2020-21, the Finance Commission has stated that it has received communication from the Defence Ministry about continuous inadequacy of funds. It has mentioned that the Defence Ministry has said that “though India is currently not engaged in any conflict, the nature of threat that it faces demands complete defence preparedness”, and “big defence acquisitions require larger capital outlays”. The ministry also told the Finance Commission that “the current provisions are inadequate to fund these and hence the need for alternate sources of additional funding”.
The Defence Ministry has proposed several mechanisms, which include “setting up a non-lapsable fund, levy of cess, monetisation of surplus land and other assets, tax-free defence bonds and utilising proceeds of disinvestment of defence public sector undertakings”.
The 15th Finance Commission’s terms of reference were amended by the Union Cabinet in July 2019 to secure adequate funds for the country’s defence and internal security.
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