Rs 4.78 lakh cr allocated for Defence; nearly 19% increase in capital outlay

New Delhi: In a marginal hike of around 1.4 percent, the defence budget was increased to Rs Rs 4.78 lakh crore for 2021-22 as against last year's allocation of Rs 4.71 lakh crore while it has emerged that the armed forces spent an additional amount of Rs 20,776 crore under the capital outlay to buy military hardware in the face of the eastern Ladakh border standoff.

According to the budget documents, the revised capital expenditure of the defence services for 2020-21 was Rs 1,34,510 crore as against the budgetary allocation of Rs 1,13,734 crore, implying the additional expenditure.

Indian armed forces procured ammunition and weapons from several countries in the last few months following the faceoff with China.

In the Union Budget presented in Lok Sabha by Finance Minister Nirmala Sitharaman, a total of Rs 1,35,060 crore has been set aside for capital expenditure that includes purchasing new weapons, aircraft, warships and other military hardware.

The capital outlay for 2021-22 is an increase of 18.75 percent compared to last year's allocation of Rs 1,13,734 crore.

In a tweet, Defence Minister Rajnath Singh thanked Prime Minister Narendra Modi and Sitharaman for increasing the defence budget to Rs 4,78,195 crore and said the nearly 19 percent hike in the capital expenditure is the "highest ever" increase in the last 15 years.

The defence minister also expressed happiness over Sitharaman's budget proposal to open 100 new Sainik schools.

The total outlay of Rs 4.78 lakh crore included an allocation of Rs 1.15 lakh crore for payment of pensions. Significantly, the allocation for payment of pension has come down as it was Rs 1.33 lakh crore in the previous budget.

Military experts said the drop in the allocation could be an indication of the government's plan to cut expenditure on payment of pension by increasing the retirement age of military officers.

Excluding the pension outgo, the total revenue expenditure, which includes expenses on payment of salaries and maintenance of establishments, has been pegged at Rs 2.12 lakh crore.

Military experts expressed satisfaction on the overall allocation considering the coronavirus-triggered adverse impact on the economy, though they said India will have to gradually raise its defence spending to deal with increasing external threats.

"I am satisfied with the total allocation to the armed forces considering the state of the economy in view of the impact of the coronavirus pandemic," said Dr Laxman Behera, a noted defence expert.

He said the increase of around Rs 22,000 crore in capital outlay is a welcome move which will help the three services in carrying on with their modernisation drive.

In the budget, the Army has been granted a capital outlay of Rs 36,481 crore as against Rs 33,213 crore in 2020-21, as per the revised estimate.

The allocation made to the Navy for capital expenditure is Rs 33,253 crore which was Rs 37,542 crore in the previous budget.

Similarly, the Indian Air Force has been given Rs 53,214 crore to buy new platforms and weapons which is a drop of Rs 1,840 crore compared to the money it spent under capital expenditure in the current fiscal.

The budgetary capital outlay for the Indian Air Force for 2020-21 was Rs 43281.91 but the revised estimate put the figure at Rs 55,055 crore.

The overall allocation of Rs 4.78 lakh crore comes to around 1.63 percent of the GDP.

"I specially thank PM & FM 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 percent increase in Defence capital expenditure. This is the highest ever increase in capital outlay for defence in 15 yrs," defence minister Singh tweeted.

The capital allocation for the Defence Research and Development Organisation (DRDO) has been pegged at Rs 11,375 crore which is an increase of eight percent over the amount made in 2020-21.

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