New Delhi: To use funds more efficiently and effectively and enhance capital expenditure, the Defence Ministry has started working on a new budget model which is based on a five-year overall plan for military procurement, sources in the ministry said on Thursday.
The current budget for defense is Rs 3.18 lakh crore, which is, 1.6 percent of the Gross Domestic Product (GDP) which is said to be the lowest in many decades. According to experts, is the lowest since the 1962 war.
Sources said that the budget is now being made looking into a five-year modernization plan and it is very important for the defense forces.
It was Defence Minister Rajnath Singh who asked the forces to give a plan for their five-year requirements so as to make changes in future budget allocation.
This is being done for “better utilization of funds” and also ensure that there is no “lapse of funds” at the year-end. “It will also enhance the efficiency in procurement,” sources said.
Earlier, the budget of defense was made looking into GDP so the budget was totally dependent on fluctuations in GDP. But now it would be made looking into forces requirement.
For current fiscal, Finance Minister Nirmala Sitharaman allocated Rs 3,18,931 crore for Defence, which will only take care of committed liabilities of the forces.
Out of Rs 3,18,931 crore allocated, Rs 2,10,682.42 crore is for revenue (Net) expenditure and Rs 1.08,248 crore for capital expenditure for defense services and the organizations and departments under the Ministry of Defence.
The amount of Rs 1,08,284 crore allocated for capital expenditure, includes modernization related expenditure. The amount is basically for the committed liabilities made by the Ministry, which included procurement of Rafale fighter jets, artilleries guns and other procurements deals signed earlier.
Also, this year import of defense pieces of equipment not manufactured in India has been exempted from basic customs duty. This will have an impact of augmenting the defense budget by approximately Rs 25,000 crore in account of saving in expenditure on custom duty for the next five years.
Interestingly, for Jammu and Kashmir Light Infantry Rs 1,264.62 crore was allocated and in 2018-1019 a revised estimate was Rs 1,256.21 crore.
For Rashtriya Rifles, Rs 7,003.25 crore was allocated and for National Cadet Corps a total Rs 1,607.28 crore has been allocated.
For establishment and expenditure of Indian Army Rs 1,41,501.19 crore was kept, for Indian Navy Rs 22,211.71 crore was allocated and for Indian, Air Force Rs 29,601.69 crores was kept.