The Defence sector got a modest hike of 10.90 per cent to sustain ongoing modernisation drive of the armed forces. Finance Minister Arun Jaitley also increased the capital outlay by more than Rs5,000 crore to Rs86,340 crore. Incidentally, the Defence Ministry surrendered nearly Rs13,000 crore from the capital outlay of last fiscal. Interestingly, the Minister did not mention Defence budgetary allocation during his speech.
The overall Defence Budget for the next financial year is Rs2,49,099 crore as against the revised estimate of Rs2,24,636 crore last year. The Budget estimate for the last fiscal was Rs2,46, 727 crore.
The new allocation includes Rs1,62,759 crore as revenue and Rs86,340 crore under the capital head. Revenue takes care of pay and allowances apart from day to day operational requirements of the armed forces.
The increase in capital outlay will enable the Ministry to shell out the first installment of more than Rs15,000 crore if the proposed deal for 36 Rafale fighter jets goes through in the next fiscal. Negotiations for fixing the price for Government to Government deal between India and France are at an advanced stage and the final tag may cross Rs65,000 crore mark.
The Defence Ministry was allocated Rs94,588 crore as capital last year for meeting contractual obligations of ongoing projects. Unable to exhaust the outlay, the Ministry surrendered more than Rs13,000 crore and the revised estimate came down to Rs81,400 crore.
Jaitley hiked the outlay for the next fiscal to Rs86,340 crore for buying artillery guns, including M-777 howitzers, six submarines, Apache, Chinook and Kamov helicopters and raising a new Mountain Strike Corps by the Army to counter China on the eastern front and in ladakh. The Corps, having more than 40,000 troops besides advanced weaponry, will cost more than Rs80,000 crore spread over seven years. The Army started raising it last year.
Officials said 86 deals worth approximately Rs1,50,000 crore are close to the final stage of approval and payments will be made in installments. Moreover, funds will not be a constraint as the Government can allocate additional funds for procuring equipment for national security, they said.
The Defence Budget accounts for nearly 17.2 per cent of the total Central Government expenditure for the year 2016-17, which is Rs19.78 lakh crore. This includes the pension Budget along with the Defence Budget. The highest jump was in the pension expenses as the revised estimate for the current fiscal was Rs60,238 crore and the Minister has catered for Rs82,332.66 crore for the coming financial year.