Andalib Akhter / New Delhi
The Union Budget presented by finance minister Nirmala Sitharaman in the parliament today envisaged a total outlay of Rs 27 lakh 86 thousand and 349 crore out of which Rs 3, 18,931.22 crore have been earmarked for Defence and an amount of over one lakh twelve thousand crore rupees for Defence Pension.
Also Rs 2, 10,682.42 crore for has been earmarked for revenue expenditure and Rs 1, 08,248.80 crore for Capital expenditure for modernisation of armed forces.
In fact the financial outlay for the defence sector is constant as it was in the Interim Budget. In the Interim Union Budget 2019-20, presented in earlier this year on Feb 1, the budgetary allocation crossed Rs 3 lakh crore for the first time, as opposed to the allocation of Rs 2.95 lakh crore in 2018.
As new initiative Import duty on defence items, which are not manufactured in India has been removed. This was the only aspect pertaining to Defence Budget which featured in the maiden budget speech of the former defence minister.
In the budget for 2019-20, Rs 3, 18,931.22 crore has been earmarked for Defence (excluding Defence Pension), Rs 2, 10,682.42 crore for revenue expenditure and Rs 1, 08,248.80 crore for Capital expenditure for modernisation of armed forces.
Analysts called for an increase in the defence budget to 2 per cent or 2.5 per cent of GDP and so on. The main issue is whether any cut in social expenditure is desirable at this stage, to divert funds for procurement of weapons.
“The amount saved on duties would be available for modernisation expenditure. Other than that, there appears to be no change. It would have been unrealistic to expect a major deviation from the allocations for defence made in the interim budget,” says Deputy Chief of Air Staff, Air Marshal Nirdosh Tyagi (retd)
“A combination of the floundering economy, the pain of rural distress and uncertain international trade environment, had left no room for manoeuvre. Undoubtedly, the Armed Forces need more funds for modernisation,” he stressed.
The Army, Navy, and Air Force are presently paying customs duty along with the GST on the defence hardware which is being imported. Under the tax reforms introduced in 2017, all taxes were merged, except the basic customs duty. Senior officers explained that these additional duties and GST were having an adverse impact on the budget slated for procurements.
Besides the basic customs duty, and the GST, the services are also required to pay additional integrated GST (IGST) on the inter-state imports/exports. Presently, the GST imposed is around 12 per cent of the Capital budget allocation for the armed forces which yearly totals up to Rs 8000 crore.