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    Defence Budget: Only 0.4% hike in capital expenditure as armed forces overshot last budget by Rs 23,000 crore

    The capital expenditure in the defence budget has been effectively increased by meagre 0.4 per cent as compared to last year’s spending, instead of said 19 per cent, as the armed forces spent Rs 23,000 crore over and above the original budget allocation of 2020-21.

    The total allocation for defence in 2021-22, including pensions, is Rs 4.78 lakh crore compared to Rs 4.71 lakh crore, last year. Without pension allocation, it is Rs 3.62 lakh crore in comparison to last year’s Rs. 3.37 lakh crore.

    The capital expenditure fund, which is meant to procure big-ticket weapons, fighter jets, submarines, helicopters and other modern military systems, has been increased from Rs 1,13,734 crore last year to Rs 1,35,060 crore – a near 19 per cent hike. However, during the Ladakh standoff with China, a lot of emergency purchases were made. This revised the last year’s actual capital expenditure to Rs. 1,34,510 crore. So, effectively there is a very marginal increase in capital outlay meant for procuring new equipment.

    REVISED EXPENSES AMID CHINA AGGRESSION
    While it was the Indian Army holding fort at the Ladakh borders during the tensions that started last year in May, the jump in revised expenditures for 2020-21 of the Navy and Air Force was much more.

    Last year, the Indian Air Force’s original allocation was overshot by Rs 11,773 crore and the Navy spent Rs 10,854 crore over their budget. In comparison, the Army spent Rs 821 crore above its allocation.

    The Indian Navy spent nearly Rs 5000 crore extra on its fleet, the budget papers show. The Air Force had to enhance its expenditure to procure several pieces of equipment and special projects, the budget papers say.

    The defence ministry also carried out extensive construction work on borders last year, following the India-China standoff. While the estimated budget for the civil work was Rs 14,500 crore, it increased to Rs 15,914.06 crore as the government spent on building infrastructure in border areas.

    In this year’s budget, the capital outlay for the Indian Army is Rs 36,481 crore, for Air Force it is Rs 53, 214 crores and for the Navy, it’s Rs 33,253 crore.

    Defence Minister Rajnath Singh said, “I specially thank Prime Minister Finance Minister for increasing the defence budget to 4.78 lakh cr for FY21-22 which includes capital expenditure worth Rs 1.35 lakh crore. It is nearly 19 per cent increase in defence capital expenditure. This is the highest -ever increase in capital outlay for defence in 15 years.”

    OTHER EXPENSES
    The allocation of pension for defence personnel in the latest budget is Rs 1.15 lakh crore as against revised allocation Rs 1.25 lakh crore, last year. This is because, last year, approximately Rs 18,000 crore pension arrears were to be paid, officials said.

    Apart from that, the allocation for civil works under the Ministry of Defence is Rs 15,257 crore as against revised allocation Rs 15,914.06 crore in last year’s budget. The civil allocation includes an allocation for construction of roads, bridges, government aid to state governments and housing in North East regions and border areas.

    NON-LAPSABLE FUNDS FOR DEFENCE
    The Finance Commission’s proposal of a non-lapsable fund for the defence sector has been accepted in principle but the modalities need to be worked out.

    Finance Minister Nirmala Sitharaman said, “In principle, we have accepted that but what formulation that will take will be different. That is something the ministry will have to work out.”

    It is had been reported earlier that the Ministry of Defence had proposed a roll-on non-lapsable budget over a period of five years for big-ticket acquisitions.

    It is proposed that a fund of Rs 2.38 lakh crore will be available for a period of five years 2021-26 that will not lapse. The fund can be used for modernisation of forces, capital investment for central armed police forces and also state police forces.

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