Pension budget reduced: Rs 4.78 lakh crore allocated for defence, capital outlay up 19%

In 2020-21, the capital expenditure of the Army, Navy and Air Force was nearly Rs 23,500 crore more than what was allocated in the budget estimates last year.

The capital outlay for the armed forces was increased by nearly 19 per cent and a total of Rs 4.78 lakh crore was allocated for the defence Budget for 2021-22 as against Rs 4.71 lakh crore last year.

In 2020-21, the capital expenditure of the Army, Navy and Air Force was nearly Rs 23,500 crore more than what was allocated in the budget estimates last year.

Defence Minister Rajnath Singh thanked the Prime Minister and Finance Minister on Twitter “for increasing the defence budget to 4.78 lakh cr for FY21-22 which includes capital expenditure worth Rs 1.35 lakh crore. It is nearly 19 percent increase in Defence capital expenditure. This is highest ever increase in capital outlay for defence in 15yrs.” He added, “I am glad that the Budget has proposed opening of 100 new Sainik Schools in the country.”

Excluding the pension bill, the defence Budget stands at Rs 3.62 lakh crore this year.

The capital outlay for the forces is Rs 1.35 lakh crore – 18.75 per cent more than Rs 1.14 lakh crore that was originally budgeted. But the actual increase is not as significant. The revised estimates of the capital expenditure of the armed forces is Rs 1,34,510 crore. The new Budget estimate for the capital outlay is thus just Rs 550.72 crore more, or 0.4 per cent over the revised estimates of 2020-21. This suggests that going by the costs incurred last year, the government is anticipating higher capital expenditure, considering the current scenario and for modernisation of forces.

Even as the higher capital expenditure comes amid Army’s unprecedented deployment through the winter in the harsh terrains of eastern Ladakh, it is the Navy and Air Force that spent more over their budgeted outlay.

While the Army had a budgeted outlay of Rs 32,392.38 crore and revised estimates stand at Rs 33,213.28 crore — an increase of 2.5 per cent — it has been given Rs 36,481.90 crore this year. The Navy’s revised estimates stand at Rs 37,542.88 crore, which is 41 per cent over its budgeted allocation of Rs 26,688.28 crore. It has been given Rs 33,253.55 crore for 2021-22. For the Air Force, capital expenditure went up from Rs 43,281.91 crore in budget estimates to Rs 55,055.41 crore in revised estimates, going up by 27.2 per cent. This year the Air Force has got Rs 53,214.77 in capital outlay.

While the Army has seen an increase over the revised capital costs it incurred, the allocation for Air Force and Navy in the budget estimates this year is less than their revised estimates from last year.

The pension budget, which is nearly a fourth of the total defence Budget this year, has come down compared to previous years. Last year, while the government set aside Rs 1,33,825 crore for defence pensions in its Budget, in revised estimates it stands at Rs 1,25,000 crore. The allocation for 2021-22 is even lower at Rs 1,15,850 crore.

Defence Ministry officials mentioned that the pension bill was inflated last year as there were arrears of about Rs 18,000 crore. Decreasing the defence pension bill has been one of the major challenges for the government and the armed forces.

Among other heads, the revenue expenditure for defence has gone up from Rs 2.09 lakh crore last year to Rs 2.12 lakh crore this year.

The civil expenditure for defence, which includes investment in Defence Public Sector Units (DPSU), public works, canteen stores and roads built by the Border Roads Organisation, among others, for this year is over Rs 36,138.36 crore.

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