Like every year, once again expectations are high from Finance Minister Arun Jaitley for a higher defence allocation in this Budget so that our armed forces can have more power to face the twin challenge posed by China and Pakistan.While India's defence budget is now the fourth largest in the world (after US, China and UK), and the Modi government publicly follows an aggressive defence policy, but when it comes to defence spending, the budget allocations paint a different picture.In the last year's Budget, defence spending received the smallest chunk of 12.22 per cent out of total budget outlay in the last two decades. There has been a steady decline from 3.18 per cent of GDP spent on defence in 1988 to half of that now at nearly 1.6 per cent against a global standard of 2-2.5 per cent. In comparison, China spends 2.1 per cent and Pakistan 2.36 per cent.Further, an analysis of defence budget allocations by Laxman K. Behera of the Institute for Defence Studies and Analyses show that allocation for modernisation (or capital procurement) has in fact shrunk by 0.9 per cent, with Navy and Army witnessing a decrease by 12 per cent and 6.4 per cent, respectively at a time when Indian armed forces are facing grave shortages in many areas like fighter planes, assault rifles, ammunition, bullet-proof jackets, howitzers, missiles, helicopters and warships.An obvious solution to correct this skewed defence allocation could be a significant jump in defence allocation but a quick-fix solution could also be to scale down India's bulky 1.5 million Army.Though Indian Army boasts of being the third-largest standing army in the world, it may not provide adequate bang for the buck as mere numbers never prove enough to win a combat. Ironically, 1.5 million Indian Army is also facing a shortage of 11,000 officers. So, instead of just recruiting jawans, India could use this opportunity to reshape the Indian armed forces into a leaner, well-equipped military.To achieve this, it can even take a leaf out of rival China's book. China, which faced similar budgetary issues, has made significant reduction in its army since 1985 on four occasions — by 1 million in 1985, 500,000 in 1997, 200,000 in 2003 and more recently 300,000 in 2015.As only the manpower costs account for over 83 per cent of the overall defence budget and the bulk of the Army’s budget goes into meeting the pay and allowances of the personnel, little scope is left for modernisation and capital expenditure. Besides, underutilisation of funds has also become a recurring feature of India’s defence budget with armed forces surrendering nearly Rs 7,000 crore in last couple of years.Thus it seems practical to not only increase the defence allocation but also 'right-size' the Indian Army, as recommended by Lt. Gen. (retd) DB Shekatkar committee, set up by previous defence minister Manohar Parrikar.