Capital component of defence budget has hovered in 33-34 percent range over last few years

While presenting her maiden Budget speech in July 2019, Finance Minister Nirmala Sitharaman (also earlier Defence Minister) mentioned modernisation and upgradation of the defence sector as "national priority." Experts believe with India's defence allocation still below 2 per cent of GDP, hiking the defence budget is the need of the hour.

Commodore C Uday Bhaskar (Retired), Director, Society for Policy Studies said, "My expectation is that Budget 2020 will be a meaningful redress of the imbalance in the defence allocation, wherein the capital component of the total fiscal allocation for defence will be brought back to the optimum of 40 per cent”.

"While noting that the Finance Minister has to address the abiding challenge of keeping the overall deficit under a certain median, even while ensuring appropriate allocation for all sectors including defence – it merits note that over the last few years the capital component of the defence budget has been hovering in the 33 to 34 percent range. Collectively, the three armed forces are in dire need of funds in the capital account for bare minimum modernization and acquisitions. The existing pattern of fiscal allocation for defence has to be reviewed and increased in a meaningful manner. One hopes that this expectation will not be in vain," said Commodore C Uday Bhaskar.

Major General Ashwani Siwach, Former Head of Territorial Army, said, "Last Budget allocation was 1.5 percent of the GDP which was the lowest after 1962 war. Defence Forces at all cost need money for modernisation. Our neighbouring countries and adversaries, especially Pakistan and China are going all out for modernisation. Pakistan's defence budget is about 3.5 percent of GDP where as China's is about 4 percent of GDP. India's budget should at least be about 2. 5 percent of GDP if not more, notwithstanding the economic slow-down. Last year, the Defence Budget was about Rs 3.05 lakh crore, out of which about 65 percent was catering to revenue for pay and allowances, pension and routine expenditure and only 35 per cent was left for capital (which is required for buying weapons and equipment). This year, it should at least be 15 per cent more than last year, to cater for committed liabilities and inflation."