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In News: The allocation for defence in the Union Budget remained unchanged from the interim Budget.
A Defence Budget or Military Budget is the amount of financial resources allocated by a government for raising and maintaining its armed forces and its personnel or other methods essential for defence purposes. Though no country dares to ignore major budgetary allocation for its defence forces, there are two aspects for this too:
According to Stockholm International Peace Research Institute, the US leads in defence spend in the world with about $648 billion followed by China ($250 billion), Saudi Arabia ($67.6 billion and India ($66.5 billion).
Highlights of Defence Budget in 2019-20
The defence budget for 2019-20 stands at ₹3.19 lakh crore, excluding defence pensions which stood at ₹1.12 lakh crore.
Defence spending is falling in percentage terms even though all military purchases are now subject to GST
The total defence allocation of ₹4,31,010.79 crore, including defence pensions, accounts for 15.47% of the total Central government expenditure for the 2019-20. This year’s allocation is 6.87% higher than the revised estimates of last year. However, it is a meagre hike, considering the mega defence tenders lined up as part of military modernisation. It doesn’t cover the revenue expenditure, committed liabilities in some cases, inflation and currency fluctuation.
This is a worrisome scenario for the much-needed military modernisation as India has signed big ticket defence deals with several countries in the last few years and the current capital allocation doesn’t even cater for payments to the committed liabilities. There would be barely any money left for new procurements that have been lined up and it is a major worry for the Services.
The Forces
Customs duty exemption
Defence has an immediate requirement of modernisation and upgradation. For this purpose, import of defence equipment that are not being manufactured in India are being exempted from the basic customs duty. The customs duty exemption is a small relief for the Services which have approached the government over the customs and Goods and Services Tax (GST) that add a significant cost to defence imports. This will have an impact of augmenting the defence budget by approximately ₹25,000 crore on account of savings in expenditure on customs duty over the next five years.
Conclusion
To provide greater momentum to the modernisation of the armed forces, there is a need to enhance defence spending. To overcome the constraints, the government may have to get more creative in how it generates the funds.
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