Defence Budget 2019-20 – Expected Disappointments, Strong Message to Forces
The first budget of the re-elected government under Prime Minister Narendra Modi saw only marginal increase in Defence almost negligible from the Interim Budget of February. delivered the Union Budget on Friday, Union finance minister Nirmala Sitharaman kept the financial outlay for the defence sector constant as it was in the Interim Budget.
Presenting her maiden budget Ms Sitharaman gave only small concessions for the defence sector by removing the customs duty on import of defence equipment. “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,” Sitharaman said.
The interim Union Budget 2019-20, presented in Parliament on 1 February 1, before the Lok Sabha elections, allocated Rs4.31 lakh crore (US$ 60.9 billion) to the Ministry of Defence (MoD). Of this total allocation, Rs3.01 lakh crore ($42.7 billion) had been earmarked for the defence budget.
The budgetary allocation as per the interim budget crossed Rs3 Lakh crore for the first time, as opposed to 2018’s allocation of Rs 2.95 lakh crore. Union home ministry was given a budget outlay of Rs 1.19 lakh crore.
In February, interim finance minister Piyush Goyal allocated Rs 1.03 lakh crore to the MHA, which was a jump of Rs 10,477 crore than the previous financial year.
In the Union Budget 2019-20 presented by the Union Minister of Finance and Corporate Affairs Nirmala Sitharaman in the Parliament, the budget allocation represented an increase of Rs5,858 crore over the revenue expenditure (RE) of the financial year 2018-19 amount of Rs1.13 lakh crore.
The Defence Budget has not surprised many as a hike was not expected with the government in a bind due to lower rate of GDP growth and need to kick start a number of infrastructure and related programmes for long term investment.
The Rs 3,18,931.22 crore allocated for the financial year 2019-20 included Rs 2,10,682.42 crore for revenue that is pay and allowances and routine running of the armed forces and and Rs 1,08,248.80 crore for capital expenditure for the defence services and the organisations/departments under Ministry of Defence. The capital allocation is expected to only take care of the committed liabilities and leave little for new acquisitions if at all.
The message to the armed forces was clear, prioritise acquisitions or rebalance overly bloated revenue budget due to large outlay on pay and allowances.