Union Budget 2020: 'Security topmost priority' but only marginal hike in defence budget

In his reaction, Defence Minster Rajnath Singh did not utter a word on his ministry, but praised Sitharaman, his predecessor to the Defence Ministry for presenting a “promising, proactive and progressive” budget

The government on Saturday proposed a marginal hike in the defence budget ignoring repeated pleas from the military to intensify the modernisation drive as the strategic importance of the Indo-Pacific region is on the rise.

In her budget speech, Union Finance Minister Nirmala Sitharaman proposed an allocation of Rs 3.37 lakh crore for the defence ministry (without pension), which accounts for the highest outflow in the government expenditure.

This is less than a two per cent jump from 2019-20's revised budgetary estimate, leaving the armed forces with only a tiny window to buy new hardware unless more allocations are made at a later stage. “National security is the government's topmost priority,” Sitharaman said in the Lok Sabha.

Taking the defence pension bill into account, the total expenditure for the Defence Ministry goes up to Rs 4.71 lakh crore.

The proposed allocation for capital procurement is Rs 1.13 lakh crore, which is little more than the Rs 1.10 lakh crore spent in the revised estimate. Interestingly, the figures reveal nearly Rs 7,000 crore was allocated to the Defence Ministry in 2019-20 at the RE stage for capital purchase as the budgetary estimate for capital purchase was Rs 1.03 lakh crore.

In the 2020-21 budget, the Navy would receive nearly Rs 3,500 crore extra (Rs 4,640 crore in the proposed BE as against Rs 1,150 crore in the last fiscal's RE) for in aircraft and aero-engines, raising the possibility of inking of some of the naval helicopter deals.

The Indian Air Force's proposed capital outlay has been cut by nearly Rs 1,600 crore (from Rs 44,869 crore in the RE of 2019-20 to Rs 43,282 crore in the BE of 2020-21), but the Service would get more than Rs 5,000 crore additional money under the head of aircraft and aero-engines possibly due to the “committed liabilities” for Rafale combat jets that are under production in France.

The spiralling pension bill continues to be a worry for the Modi government that implemented one rank, one pension scheme resulting in higher pension package for retired soldiers. The Finance Minister proposed to set aside Rs 1.33 lakh crore for pension, which is higher than the budget for capital procurement. The trend was similar last year.