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Government Keeps Defence Below The Radar In Union Budget 2019

In terms of policy makeover, the Government has exempted import of defence equipment from basic customs duty. Instead, added a clause by increasing taxation on items made in India.

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Despite the feverish speculation on higher allocation for the defence in the Union Budget 2019, Finance Minister Nirmala Sitharaman kept the financial outlay for the defence sector stagnant as it was in the Interim Budget. The outlay for the defence is Rs 4, 31,011 crore for the ministry of defence.  Out of the total allocation, Rs 3,18,931.22 crore have been earmarked for Defence Expenditure, while the rest is civil expenditure which includes pensions and miscellaneous expenses. Out of the total allocation Rs 2,10,682.42 crore is marked for revenue expenditure. Officially, there is a marginal increase of 0.01 per cent in the defence budget in comparison to the interim budget.

Out of the total allocation, Rs 1,08,248 crore has been marked for capital outlay which is the main component of the military budget for procuring new equipment for the armed  forces.

"The capital allocation of ministry of defence under BE (budget estimate) 2019-20 is 31.97 per cent of the total which accounts for 15.47 per cent of the total central government expenditure,” Defence Minister Rajnath Singh Tweeted.

In terms of policy makeover, the Government has exempted import of defence equipment from basic customs duty. Instead, added a clause by increasing taxation on items made in India.

Though, commerce minister, in her maiden speech outlined the urgency of prioritizing Defence said, “Defence has an immediate requirement of modernisation and upgradation. This is a national priority. For this purpose, import of defence equipment that are not being manufactured in India are being exempted from the basic customs duty.”

The Interim Union Budget 2019-20, presented in Parliament on 1 February, before the Lok Sabha elections, allocated ₹4.31 lakh crore ($60.9 billion) to the ministry of defence (MoD). Of this total allocation, ₹3.01 lakh crore ($42.7 billion) had been earmarked for the defence budget.

Industry is muted in the response as they were expecting big announcement in terms of incentives for the domestic industry as well as the foreign Original Equipment Manufacturers (OEMs). 

Post Balakot, the thrust on the modernization of Armed Forces was bugled, realizing the real threat scenario at the two fronts of India. While China has increased its defence budget by 7.5 per cent for this year, hiking it to $177.61 billion from last year's $165 billion. It is over three times India's defence budget.

Since 1988, there has been a steady decline from 3.18 per cent of GDP spent on defence. When one compared to the global standard amongst the nations with sizeable military strength of half of million, it is about 2 to 3 per cent against the 1.58 per cent of the defene budget of India.

The army had re-prioritised its five year plan for 2018-2023 to meet its operational requirements, state of the art equipment- 5.5 lakhs guns- and snipers to replace a decade old INSAS and building better road connectivity along the frontier with China. 

Indian Air Force will be down to 30 squadron by March 2019- a dangerous level for two front theories- and need to acquire future jet fighter. Already, the search for 110 Future Multi-Role Fighter (FMRF) is awaited to replace the vintage MiGs. 

Navy is at the critical juncture of modernization. A step ahead in the modernization compared with other two forces, Indian Navy is charting out advance level capability as: Project 75(I) envisaged construction of six submarines about worth Rs 60,000 crore; Project 75 Six Scorpene submarines; two aircraft carrier-INS Vikrant and Vishal and an amphibious US2 from Japan.

It is also to be noted that India's defence budget is now the fourth largest in the world (after US, China and UK), it is much less in the actual firepower. Looking at the answer straight a capital raise in the defence budget is first and foremost. As former Army Chief, Gen Malik puts it straight: “Defence budget should be increased up to 2 to 2.5 percent of GDP or about 20 percent increase every year in the next five years. Inadequacy of defence budget delays modernisation and is also mounting deficiencies. It is sad to see that many newly raised units do not have authorised weapons and equipment for many years.”


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