As in preceding years, various Budget documents calculated the defence allocations differently. The detailed Expenditure Budget took a comprehensive view of defence spending, with its demands for grants and the notes thereto, including all allocations to the Ministry of Defence (Demand No. 19); revenue allocations to the three services, Defence R&D Organisation (DRDO) and Ordnance Factories (Demand No. 20), capital allocations to these entities (Demand No. 21) and also defence pensions (Demand No. 22). These four allocations amount to Rs 4.31 trillion.
However, Finance Minister Piyush Goyal’s Budget speech, and a government statement released through the Press Information Bureau, treated the pension and MoD allocations as outside the defence Budget. By that count, the defence budget amounts to Rs 3.02 trillion.
Addressing Parliament, Goyal said, “Our defence budget will be crossing Rs 3 trillion for the first time in 2019-20. For securing our borders and to maintain preparedness of the highest order, in necessary, additional funds would be provided.”
Underlining the political backdrop to the interim Budget, Goyal’s speech also made reference to the One Rank, One Pension (OROP) scheme, which the government has implemented during its tenure.
“The previous governments announced it (OROP) in three budgets but sanctioned a mere Rs 500 crore in the 2014-15 interim budget. In contrast, we have already disbursed over Rs 35,000 crore after implementing the scheme in its true spirit,” said Goyal.
For the first time ever, the defence capital budget crossed the Rs 1-trillion mark, with the Rs 1.03 trillion capital allocation for 2019-20 exactly 10 per cent higher than the current year’s revised estimate of Rs 93,982 crore. Given the significant pay-outs impending for fighter aircraft, missiles, warships and other systems, there is likely to be a demand for an increase at the revised estimates stage later this year.
Welcoming the Budget, Bharat Forge Chairman Baba Kalyani said, “We hope that ‘Make in India’ in defence will result in greater role for the private industry in this critical sector of the country’s economy. The thrust on MSMEs is also welcome…”