Comments
Budgeting generously for the Defence is not the flavour of the year across the world, so it seems. The UK is imposing a cut of 8 per cent, the US is cutting $78 billion over five years and even Russia, although suffering from an obsolete fighting machinery, has chalked out a slow-paced long haul plan extending till 2020 for rejuvenation of its conventional arms.
Defence expenditure
Therefore amidst such gloom and doom for Defence, it is a small consolation that India's Finance Minister has not been as tight-fisted as anticipated and has increased the Defence Budget to Rs 1,64,400 crore for FY 2011-12, an increase of 11.5 per cent compared to 2010-11 which was Rs 1,47,344 crore (merely 3.9 per cent over the previous year 2009-10). Neither the projection of growth of Defence expenditure — only at 8.3 per cent by the Thirteenth Finance Commission — nor his strenuous efforts in the pursuit of fiscal consolidation seems to have deterred him from being a pragmatist as far as Defence is concerned.
The money provided under capital at Rs 69,198 crore has been increased by a reasonable 15 per cent over the previous year.
Logic behind increase
It appears that the budgeting exercise this time around is not merely a running account of the arithmetic of carrying forward the committed liabilities but a more realistic assessment of the needs, bearing in mind the major acquisitions in the pipeline [such as 126 Medium Multi-role Combat Aircraft (Rs 45,000 crore), C-17 Globemasters and Reconnaissance Surveillance Helicopters].
Hopefully, this favourable financial backing will be matched by the Ministry of Defence (MOD) which in the past has blotted its record by surrendering funds due to its inability to take timely decisions.
Reckoned as a percentage of total Government expenditure, the Defence expenditure appears to be falling from 13.88 per cent in 2009-10 to 13.11 per cent but as a percentage of GDP it is mildly recovering from the drop at 2.12 per cent in 2010-11 to 2.18 per cent, despite the economy growing at close to 9 per cent.
Contributors
From the figures provided under the Revenue head, the performance of India's premier Defence equipment manufacturer — Ordnance Factories Board (OFB) — appears noteworthy. Unlike last year, when a budgetary support of Rs 246 crore was provided to the OFB, this year the allocation to OFB is Rs 1,176 crore. But an increase of merely 7.5 per cent for the Defence Research and Development Organisation (DRDO) at Rs 5,624 crore does not match the rhetoric of indigenous development in Defence Production Policy that was announced in January 2011. The increased allocation at Rs 64,251 crore for the Army and Rs 10,584 crore for the Navy (from Rs 57,326 crore and Rs 9,329 crore respectively in the previous year) appear generous compared to the Rs15,927 crore granted to the Air Force (Rs 15,210 crore last year).
Tailpiece . Curiously the receipts from Canteen Stores Department over two years shows a decline when the headline inflation is in double digits.
(The author is a former Member, Ordnance Factories Board.)
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.