According to the Fifteenth Finance Commission, there will be a gap of Rs 15,24,100 crores between the armed forces’ anticipated spending and annual allocations between 2021-22 and 2025-26 and revenue and capital expenditure would grow at 7 per cent and 16 per cent per year during this period, respectively

At the onset of the union budget, every ministry and department expects a significant increase in its budget outlay, other than for salaries and other mandatory functions and the Indian armed forces are no exception.

For a long time, the armed forces have knowingly or unknowingly seeked a large sum of the budget, which is always rejected or not fully fulfilled. In 2000-01, the Ministry of Defence and its departments made a combined bid for an allocation of Rs 72,724 crores. Following due diligence, the MoD reduced the projection to Rs 63,587 crores. In the end, the MoD received only Rs 58,587 crore, which was 20 per cent less than the initial projection.

This pattern of projections and allocations has continued and the gap between the two has grown over the last two decades. According to the Standing Committee on Defence, the gap between projection and allocation for the current fiscal year was Rs 1,01,678 crore for the armed forces alone.

On the condition of anonymity, a person with knowledge of the development said, “It is always difficult to predict, but observing the previous allocations, it is reasonable to conclude that the allocation for the coming fiscal year will be insufficient to meet the armed forces’ projected needs. This is likely to be true for other branches of the MoD, such as the Defence Research and Development Organisation (DRDO), the Coast Guard and the Border Roads Organisation (BRO).”

Among defence analysts, there is nearly the same belief that the defence budget should be increased. A segment of the strategic community advocates increasing military spending to 3 per cent of GDP. However, fiscal constraints don’t allow the government to make it possible.

According to the Fifteenth Finance Commission, there will be a gap of Rs 15,24,100 crores between the armed forces’ anticipated spending and annual allocations between 2021-22 and 2025-26. This was based on the generous assumption that revenue and capital expenditure would grow at 7 per cent and 16 per cent per year during this period, respectively.

These figures exclude defence pensions, which have nearly tenfold increased from Rs 12,000 crore (BE) in 2000-01 to Rs 1,19,696 crore this year. The requirement is expected to rise further in the coming fiscal year due to not only the normal annual increase in pensions but also the second pension hike under the One Rank One Pension (OROP) Scheme, which will cost Rs 8,450 crore in recurring expenditure and Rs 23,638 crore in arrears until June 2022.

The issue is the government’s inability to raise sufficient revenue through taxation and borrowing, both of which have political and economic consequences. Higher revenue is required to increase allocations for defence and other sectors such as health, education, infrastructure and poverty alleviation.

“In fact, the union budget is more concerned with the government’s economic policies and schemes than with matters of defence and security, which almost entirely fall under the purview of the MoD and, to a lesser extent, the National Security Council. Instead of making financially unviable plans and lamenting the inadequacy of budgetary allocations, the MoD needs to pull its socks up and evolve policies and plans in line with fiscal reality. It is not the finance minister’s responsibility to advise the MoD on how to proceed,” he said.

Recently, Union Defence Minister Rajnath Singh emphasised that efforts towards ‘Make in India’ are neither isolationist nor are they just meant for India alone. “Our self-reliance initiative is beginning a new paradigm of partnership with our partner countries. Partnerships are being made with global defence industry giants,” he had stated.

While the finance minister is unlikely to assume responsibility for expounding the defence plan and strategies, it is possible that some reference will be made to Atmanirbharta, or self-reliance, which has become the trope for local manufacturing, indigenisation, research and innovation, private sector participation, import embargoes, defence exports and the like.

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