The Union Budget for the financial year 2019-20, presented by Finance Minister Nirmala Sitharaman in Parliament on Friday, kept the overall allocation for defence unchanged from the interim budget, with a total outlay of Rs 3,18,931.22 crore. This excludes defence pensions, for which an amount of Rs 1,12,079.57 crore has been provided in the budget.
Thus, the total defence allocation of Rs 4,31,010.79 crore accounts for 15.47 per cent of the total central government expenditure for the financial year 2019-20. But a big relief has been provided to the Defence Ministry by exemption of the customs duty on defence products, which means that the ministry will not have to pay customs duty on major items. This duty was imposed on the Defence Ministry in 2016 and it had subsequently raised the issue with the Finance Ministry for the exemption.
Sources in Defence Ministry told The Indian Express that the exemption means an additional availability of Rs 5000 crore annually for import of defence equipment. It would, sources said, make up for the lack of increase in capital allocation for defence.
Although the allocation has remained unchanged from the interim budget, the allocation of Rs 3,18,931.22 crore represents a growth of 7.93 per cent over Budget estimates (2,95,511.41 crore) and 6.87 per cent over revised estimates (Rs 2,98,418.72 crore) for the financial year 2018-19.
Out of Rs 3,18,931.22 crore allocated for the financial year 2019-20, Rs 2,10,682.42 crore is for Revenue (Net) expenditure and Rs 1,08,248.80 crore for capital expenditure for the defence services and Defence Ministry.
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The amount of Rs 1,08,248.80 crore allocated for capital expenditure includes modernisation-related expenditure. Capital allocation under Budget estimates for 2019-20 is thus 31.97 per cent of the total central government capital expenditure, which is Rs 3,38,569.00 crore.