Defence Notes

Indian budget falls short of expectations

01st February 2017 - 19:21 by Rohit C Silva in Delhi

India declared a defence budget of $40.6 billion for 2017/18, a 6% increase over last year’s spending of $38.2 billion. The budget did not meet the expectations of experts and senior military officers hoping that spending would rise by at least 15% to cater to significant modernisation programmes in the pipeline.

Delivering his budget speech in parliament on 1 February, Finance Minister Arun Jaitley said the allocation included capital expenditure of $12.8 billion for upgrading the capabilities of the country’s armed forces. Capital expenditure is 10% higher than last year.

One expert commented, ‘The allocation comes as a disappointment. Payments have to be made in phases for weapons and equipment that has already been contracted, and several deals are on the verge of being signed. The military will have to grapple with a funding challenge.’ 

India has signed contracts worth billions to acquire Rafale fighters, M777 howitzers, Apache and Chinook helicopters, T-90MS tanks and other military hardware.

India is also planning to buy aerial refuellers, transport aircraft, submarines, frigates, air defence systems, artillery pieces, third-generation anti-tank guided missiles and assault rifles to plug gaps in its capabilities.

The 6% hike is the lowest in the last three years when the annual increase was in the region of 10%. 

‘The government provided impetus to several projects that were on the backburner. It had certainly raised expectations and the armed forces were hoping for a healthy increase in defence spending,’ said a retired three-star general.

This year’s defence budget accounts for 1.6% of the country’s GDP, a far cry from the desired 3% that India’s military planners have been advocating. Last year, it was 1.72% of GDP. 

‘Calculated against GDP, the budget has been below the 2% mark for several years now. The trend doesn’t augur well for a country that needs to upgrade its capabilities quickly to tackle a combined threat from China and Pakistan,’ an official said.