More Funds For Weapons, Less For Pensions: Why 2021 Defence Budget Is A Step Forward In The Right Direction

For nearly a decade, defence experts have pointed towards the rising bill for pensions as the reason for decrease in the share of capital allocations— the fund assigned to the armed forces for weapons purchases — in the defence budget.

The Narendra Modi government appears to have addressed this issue in the 2021-22 defence budget, which comes amid the most serious confrontation with China along the Line of Actual Control (LAC) in eastern Ladakh.

In the backdrop of the ongoing standoff, the allocation for capital expenditure in the 2021 budget has seen an increase of Rs 21,326 crore or nearly 19 per cent compared to budget estimates of the 2020 budget.

This 19 per cent increase in the budget for weapons purchases is the highest in 15 years, Defence Minister Rajnath Singh has pointed out.

Revised estimates for 2020-21 released yesterday (1 February) also show that the armed forces got an additional Rs 20,776 crore under capital expenditure last year amid large-scale mobilisation along the LAC.

As a result, the three services have spent Rs 484,736 crore in the current year, significantly more that what had been allocated to them by the government in February 2020.

This fund was used by the three services for emergency purchases of equipment and ammunition amid rising tensions with China.

At the same time, allocation for pensions has gone down significantly. From Rs 1.34 lakh crore in budget estimate last year to Rs 1.15 lakh crore allocated by the government in the budget this year, the allocation for defence pensions has seen a decrease of Rs 17,775 crore or nearly 13.5 per cent.

Of the Rs 1.34 lakh crore that it had allocated for defence pensions in 2020, the government has spent only Rs 1.25 lakh crore, a revised estimate shows.

Clearly, the government has made a move towards containing the manpower costs and tried to devote more resources for modernisation.

(Read: Why The Armed Forces Have Little Money For Modernisation)

If pensions are excluded, India’s defence budget has seen an increase of about 7.3 per cent, up from Rs. 3.37 lakh crore in 2020 to Rs. 3.62 lakh crore for 2021.

Chief of Defence Staff General Bipin Rawat’s plan to to increase the retirement age of armed forces personnel will help consolidate this trend further, experts say.

In line with these trends, allocations for the Defence Research and Development Organisation (DRDO) and the Border Roads Organisation (BRO) have also increased.

While capital allocation for DRDO has been increased to Rs 11,375 crore, a growth of 8 per cent over 2020, the BRO’s allocation has been increased to Rs 6,004 crore, an increment of over 7.4 per cent over 2020.

Over the past few years, and even during the ongoing standoff with China and the Covid-19 pandemic, the BRO has increased the speed of road construction, giving a much-needed boost to connectivity in border areas.

While this has narrowed the infrastructure gap significantly, China still has an edge having started working on it much before India turned its attention towards this.

An increased allocation for the BRO will help the agency speed up work as the Army is bracing for a hot summer along the Line of Actual Control this year.

Among the three defence services, the Indian Air Force (IAF) has received the largest allocation at Rs 53,215 crore, followed by the Navy at Rs 35,904 crore and the Army at Rs 36,532 crore.

In 2020-21, the Air Force spent Rs 55,084 crore, the Navy Rs 40,043 crore and the Army Rs 33,283 crore.

A large part of this fund allocated to the IAF will be used for replenishing its dwindling fighter fleet. Increased funding for the Navy points towards a renewed focus on the Indian Ocean, which has seen increasing Chinese presence. (Read: Why China Is Deploying  Underwater Drones Near Indian Ocean Choke Points)