India-China Standoff: Defence Budget expected to be hiked to meet urgent requirements of the armed forces

Indian Union Budget 2021-22: Amidst the continued standoff between India and China, along the Line of Actual Control (LAC) in eastern Ladakh, the defence budget for the FY 2021-22 is likely to witness unprecedented growth.

Previously

For the Year 2020 – 2021, the hike was but less than two per cent hike over the Revised Estimates (RE) for the Year 2019-2020. Allocation of Rs 3.37 Lakh Crores for 2020-21 constituted nearly 1.5 per cent of the projected GDP and therefore the Capital allocations were not enough for fulfilling the committed liabilities. And, if the pensions for the defence personnel are added then the budget outlay for 2020-21 stood at Rs 4.71 lakh crore.

And for the new FY, expectations are that there could be a decent hike and it could touch around Rs 6 lakh crore.

Why?

This will help in moving the large ticket projects which are now needed on urgent basis which will help in dealing with the increasing threats from China and Pakistan. Already, in view of the standoff with China, urgent procurements for the armed forces had to be made which touched around USD 2 billion.

The office of the CDS is additionally planning new commands and the focus is on the jointness of the services, and prioritization and financing. Therefore, the Ministry of Defence would keep these new changes in mind too.

Modernisation Fund

There could be special modernization fund too for the armed forces. This is something that the armed forces need.

Speaking to Financial Express Online, a senior officer who wished to stay anonymous says, “There are several modernization projects that require immediate implementation because of the conditions on the LAC and LOC. These include helicopters, fighter aircraft, drones, artillery guns amongst others.”

As reported earlier, the Ministry of Defence had recommended setting up of a non-lapsable fund. In the new budget, this request is expected to be fulfilled.

Various big-ticket items of the Indian Army, Air Force and the Navy were hit due to shortage of funds. The Indian Navy has cut out its number of the Mine Counter Measures Vessels and the helicopters; the IAF has been facing an acute budget crunch and has been forced to go slow on several acquisition plans.

For the Indian Air Force, the 114 fighter aircraft, transport aircraft which are meant to replace the ageing Avros have all been delayed due to lack of funds.

Expert view

With India’s growing geopolitical and economics stature, enhancing defence budget allocations and reforming processes of multi-domain capability development is very important for the country’s security.

According to Air Marshal Nirdosh Tyagi, former Deputy Chief of Air Staff, “Despite the global pandemic of COVID-19, the strain on the Indian economy is less than earlier estimates. Therefore, cut in the Defence Budget is unlikely and the allocations could be based on the immediate priorities of the armed forces.”

Adding, “Since the future looks brighter, the budget should adequately cater for capital expenditure on modernization schemes. Also, prioritisation needs to be done on the basis of current and near term operational needs”

Is leasing an option?

Sharing his view with Financial Express Online, Air Marshal Nirdosh Tyagi said, “Leasing is suited for equipment readily available from global sources. It is a good option to try out something before making a large investment. Buying may be a better option for indigenous equipment.”

“Focus should be on relevant technologies, which fulfil an operational requirement. New technology is better if there is an identifiable advantage within reasonable cost,” he opines.

Meanwhile …

What is in pipeline?

As reported earlier, 83 LCA Mk1A is awaiting final approval for the IAF.

114 MRFA is in pipeline.

LCA Mk II is in the Design & Development phase.

Naval helicopter case has been pending for long.

FICV, TCS and BMS are some of the large schemes of India Army which is being progressed through Make route. However, there has been no forward movement on these projects. And since Indian troops are deployed in the Galwan Valley, these are required on an urgent basis.