NEW DELHI: To use funds more efficiently and effectively and enhance capital expenditure, the Defence Ministry has started working on a new budget model which is based on a five-year overall plan for military procurement, sources in the ministry said on Thursday.
The current budget for defence is Rs 3.18 lakh crore, which is, 1.6 per cent of the Gross Domestic Product (GDP) which is said to be the lowest in many decades. According to experts, is lowest since the 1962 war.
Sources said that the budget is now being made looking into five-year modernisation plan and it is very important for the defence forces.
It was Defence Minister Rajnath Singh who asked the forces to give a plan for their five-year requirements so as to make changes in future budget allocation.
This is being done for "better utilisation of funds" and also ensure that there is no "lapse of funds" at the year-end. "It will also enhance the efficiency in procurement," sources said.
Earlier, the budget of defence was made looking into GDP so the budget was totally dependent on fluctuations in GDP. But now it would be made looking into forces requirement.
For current fiscal, Finance Minister Nirmala Sitharaman allocated Rs 3,18,931 crore for Defence, which will only take care of committed liabilities of the forces.
Out of Rs 3,18,931 crore allocated, Rs 2,10,682.42 crore is for revenue (Net) expenditure and Rs 1.08,248 crore for capital expenditure for defence services and the organisations and departments under Ministry of Defence.
The amount of Rs 1,08,284 crore allocated for capital expenditure, includes modernisation related expenditure. The amount is basically for the committed liabilities made by the Ministry, which included procurement of Rafale fighter jets, artilleries guns and other procurements deals signed earlier.
Also, this year import of defence equipments not manufactured in India has been exempted from basic custom duty. This will have an impact of augmenting the defence budget by approximately Rs 25,000 crore in account of saving in expenditure on custom duty for next five years.
Interestingly, for Jammu and Kashmir Light Infantry Rs 1,264.62 crore was allocated and in 2018-1019 a revised estimate was Rs 1,256.21 crore.
For Rashtriya Rifles, Rs 7,003.25 crore was allocated and for National Cadet Corps a total Rs 1,607.28 crore has been allocated.
For establishment and expenditure of Indian Army Rs 1,41,501.19 crore was kept, for Indian Navy Rs 22,211.71 crore was allocated and for Indian Air Force Rs 29,601.69 crore was kept.