“Guns for Butter -1”
The first in a five-part series analyzes the Army’s capex demand versus allocation
By Vikas Gupta
Defence News of India, 29 Mar 23
37e Report of 17e The Lok Sabha Defense Standing Committee reveals that after five years of insufficient funding for capital spending, the defense budget for the financial year 2023-24 (FY24) this year allocated funding to defense services in capital that they had planned as their need for the year.
Under the current fund allocation system, the army, navy and air force separately determine their requirements for the year. These projections are sent by the Ministry of Defense (MoD) to the Ministry of Finance (MoF) for allocation under Demand Number 21, which is the “Capital Expenditure for Defense Services, Procurement Policy and defense planning”.
However, the 37e The Standing Committee’s report, which was presented to both Houses of Parliament on March 21, indicates that in the 2018-2019 fiscal year, the Department of Finance allocated only 52% of the projected investment of services. This figure increased each year to 59%, 63%, 61%, 68%, until this year’s budget provided for the allocation of 100% of the service projections.
In the revised estimates (ER) for the same period, the Ministry of Finance allocated only 59% of the projections for the 2019-20 financial year; then 60%, 77% and 78% in subsequent years, up to a respectable 99% in last year’s revised estimates.
In the budget estimates for FY24, the total projection for the army, navy and air force was Rs 148,955 crore – while capex allocation amounted to the same figure.
“The Committee is pleased to note that the allocation made to the MoD for FY24 has put forward the request for Rs. 37,341, 52,804 and 58,808 for Army, Navy and Army of the air respectively under the head of the capital and were similarly granted by the Ministry of Finance, without any deduction,” the report said.
The report, however, bears in mind the possibility that additional funds may be required beyond what has been allocated in the budget. In this case, the Ministry of Finance should make additional funds available in the RE.
“The Committee therefore recommends that it be incumbent on the Ministry to carry out a thorough analysis of the expenditure of the allocated funds during the first two quarters of the current financial year (2022-23) so that in the event of the need for a subsidy Further, timely approval can be obtained from the Ministry of Finance at the ER stage,” the report states.
Defense capital investment provides for the land and construction works of the three services, defense equipment, tanks, warships, aircraft and aircraft engines, and shipyards. This is for various Department of Defense departments and organizations including Army, Navy, Air Force, Joint Staff, Rashtriya Rifles, Defense Ammunition Factories, Defense Research and Development Organization (DRDO), Director General of Quality Assurance (DGQA), National Cadet Corps (NCC) and the Married Accommodation Project (MAP).