New Delhi: Given how the Narendra Modi government loves to be seen as a muscular regime, the complete silence by Union finance minister Nirmala Sitharaman on defence allocations in her speech was conspicuous. More so as the 2021-22 budget comes in the backdrop of a prolonged India-China stand-off in Ladakh and suspicion of encroachment in Arunachal Pradesh.
The budgetary outlay for the defence ministry has been pegged at Rs 4,78,195.62 crores (Budget Estimate) – a token increase of Rs 6,817 crores from last year. A mere 1.4% improvement in defence expenditure – a negligible climb in any scenario – reflects the finance minister’s lack of emphasis on this aspect of the budget.
Not a word on the Defence Allocations in Finance Minister @nsitharaman‘s budget speech.
Not looking good for the military. If there had been a significant raise in allocations, the government would have made it a headline issue.
— Ajai Shukla (@ajaishukla) February 1, 2021
A token rise of 1.4% in this year’s defence budget, compared with last year’s allocations.
From Rs 4,71,378 crore last year, allocations have been raised to Rs 4,78,195 crore for 2021-22… a rise of Rs 6,817 crore.
I suppose military should be happy budget hasn’t been slashed!
— Ajai Shukla (@ajaishukla) February 1, 2021
Yet, the rather unusual miss by Sitharaman, experts say, was because the total allocation, even with the minor hike, may eventually turn out to be highly insufficient, given the big purchases India has made in the defence sector in the aftermath of an unexpected India-China face off in Ladakh.
“Much of the capital expenditure allocated to the defence ministry will go towards fulfilling India’s contractual obligations. We have recently done a lot of purchasing from abroad. The purchase of Russian S-400 missile defence system was a major deal. So when (the union defence minister) Rajnath Singh says that capital expenditure has gone up, you have to take that with a pinch of salt,” Pravin Sawhney, editor of Force magazine, told The Wire.
This means that a majority of the budgetary outlay will be spent towards pre-decided expenditure.
“The Ladakh situation was unexpected. As an emergency measure, India, after exhausting its reserves, also had to purchase winter clothing and other essential commodities from the US and some European countries as an emergency measure for our Jawans posted in Ladakh. All of it will come from the capital expenditure,” Sawhney said.
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Last year, the Union finance ministry set aside Rs 4,71,378 crore. However, the revised estimates that came on Monday indicated that India spent Rs 20,777 crores more than the capital outlay allocated in 2020-21 as it went looking to make emergency purchases to counter the China offensive. The need to even slightly push 2021-22’s budgetary outlay for defence, therefore, is a direct outcome of an unexpected border situation in which India had to spend a lot more in amping up its armoury than usual.
It is in this context that Sawhney said that the supplementary demand (difference between BE and Revised Estimates) for the defence sector is most likely to go up, and will reflect in next year’s budget. “There are still two big purchases India has to make. The Ka-226 Russian helicopter deal, pending for the last few years, has to be made. And, since relations with China and Pakistan have still not improved, the Indian Air Force will need more smart weapons,” he said.
India does not produce smart weapons, or precision stand-off weapons, by itself and is forced to buy from abroad. Since purchasing from abroad would need immediate advance payments, much of the capital expenditure allocated in the budget will be likely spent on these emergency measures.
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With all the purchases to be done, the defence sector outlay appears to be insufficient to make any new purchases.
The Union government’s focus on self reliance or ‘Atmanirbhar India’, thus, could come to its rescue.
“The idea of atmanirbharta is a double-edged sword. You can claim that we are self-reliant, and at the same time, unlike with purchases from abroad, you don’t have to make upfront payments while placing an order for ammunition. Recently, the government, in order to boost indigenous defence manufacturing capability, got the Indian Air Force to place orders worth Rs 48,000 crore with the Hindustan Aeronautics Limited (HAL) to acquire 83 Light Combat Aircraft (LCA) Tejas fighters,” Sawhney said, adding that it will be a big struggle for the government and the armed forces to generate more resources with the available budgetary allocations this year.