Union Budget 2021-22 - A Strong Push to Defence Modernization

By Editor 05-Feb-2021

The Defence Capital expenditure amounts to a major part of the total capital budget and it is primarily meant to improve the infrastructure and modernize the Armed Forces thereby maintaining a tactical edge over the adversaries. As the Indo-China standoff along the Line of Actual Control prevails, the increase in the outlay derives much significance. The governmentagrees to the demand that more money needs to be pumped into the defence sector and the budget reflects this vision. In the words of Defence Minister Rajnath Singh, who thanked the FM, “it was the highest ever increase in capital outlay for defence in 15 years” and it is expected to give a firm push to the ongoing modernization of the armed forces.

With the capital outlay for defence sector having increased by nearly 19 per cent, the Union Budget for the Financial Year 2021-22, presented by the Finance Minister Nirmala Sitharaman, has given an upward push to ongoing defence modernization. And in the words of Defence Minister Rajnath Singh, who thanked the FM, “it was the highest ever increase in capital outlay for defence in 15 years.”

The defence allocation in the budget has been increased to Rs 4.78 Lakh Crores for the Financial Year 2021-22. Excluding Defence Pension, the total allocations for Defence Services and other organizations/Departments under Ministry of Defence for the FY 2021-22 is Rs 3.62 Lakh Crores which is an increase of Rs 24,792.62 Crores over the Current FY 2020-21.

The Defence Capital expenditure amounts to a major part of the Government’s total capital budget and it is primarily meant to enhance the infrastructure and modernize the Armed Forces to maintain a tactical edge over the adversaries. As tensions with China continue to escalate, in the wake of the violent standoff in Ladakh with China, the increase in the outlay derives much significance.This increase in revised estimates of capital expenditure for 2020-2021 reflect the flurry of emergency procurements from countries like the US, France, Russia and Israel to bolster military readiness. 

With the role of the Indian Air Force and Indian Navy extending much beyond the land borders and India aspiring to be regional power in the IOR, the expansion of air and naval fleet is inevitable. This also puts a strain on the maintenance of these assets to meet the operational requirements. Moreover, now the Indian Army is in urgent need of maintaining a high volume of troops in the northern hostile regions for a longer duration now and this deployment may become permanent.

The allocation under capital expenditure which relates to modernisation and infrastructure development of Armed Forces has been significantly increased.  The allocation under Capital of Rs 1,35,060.72 crore for FY 2021-22 represents an increase of 18.75 per cent over FY 2020-21 and 30.62 per cent over FY 2019-20. This is the highest ever increase in capital outlay of Defence in the last 15 years.

Rajnath Singh said “Based on 6 pillars of good governance this Budget will usher India into a new era of inclusive growth and prosperity. I am glad that the Budget has proposed the opening of 100 new Sainik Schools in the country. These schools will be set up in partnership with States, Non-Governmental Organisations (NGOs) and private institutions,” he said.

The Capital allocation for DRDO has been increased to Rs 11,375.50 crore. This is an increase of 8 per cent over 2020-21 and 8.5 per cent over 2019-20. The allocation for Border Roads Organisation (BRO) has been increased to Rs 6004.08 crore which is 7.48 per cent increase over FY 2021-22 and 14.49 per cent over FY 2019-20.