Mismatch in projected, allocated budget for forces, says Defence House panel report

Parliament’s Standing Committee on Defence has again chastised the government for not meeting projected demands of the military in its budgetary allocation. In its report submitted Tuesday, the committee noted that “after examination of the documents provided by the Ministry of Defence in connection with examination of Demands for Grants for 2021-22…there has been a mismatch between projected and allocated budget for Defence”.

The committee said that against a “projection of Rs 6,22,800.51 crore for 2021-22 in Budget Estimates, Rs 4,78,195.62 crore have been allocated for total Defence Budget” – or, a “shortfall of Rs 1,44,604.89 crore”.

It said that “surprisingly, this BE [Budget Estimate] allocation on 2021-22 is lesser than RE [Revised Estimate) allocation of Rs 4,84,736.06 crore for total Defence budget in 2020-21 although the trend of budget allocation in the past few years suggests that amount allocated for Defence budget at the stage of Budget Estimates for a particular financial year is always greater than that of the Revised Estimates for the previous financial year”.

The report stated that Chief of Defence Staff (CDS) Gen Bipin Rawat “apprised the Committee that the allocated funds are being prioritised towards operational preparedness with regard to the borders of the country”, and the budget is “further progressively utilised for phased payments towards the procurement”.

It said that the committee understood that “heads under Capital Outlay and Non-Salary Revenue have shown growth in Defence Budget 2021-22 in comparison with that in 2020-21 and allocated funds are being prioritized according to operational and acquisition requirements of the Forces”.

According to the report, the committee expected that the MoD will “utilise this budget for developing and acquiring the most modern state of the art fighting platforms, which can match Northern and Western neighbours in the light of current security threats on the Northern frontiers of the country”.

As per MoD’s submission, the committee noted, the “actual increase in percentage in Defence Budget at the stage of Revised Estimates 2020-21 over 2019-20 (Actuals) amounts to 0.41 percent after adjusting inflation”, and recommended that allocations for the Defence Budget at RE stage “should be suitably enhanced so that the planned Capital and Revenue expenditure for the Forces is not negatively affected by inflation”.

The committee, in its report, highlighted the gap between the projected and the budget estimates of the forces. Against the Army’s projected amount of Rs 51,492 crore for capital expenditure, Rs 36,531.90 crore has been allocated, which amounts to a shortfall of Rs 14,960.20. Similarly, for the Navy, the projected capital expenses were Rs 70,920.78 crore, but the allocated amount is Rs 33,253.55 crore – or a shortfall of Rs 37,667.23.

For the Air Force, the gap between the projected and allocated capital expenses was Rs 23,925.79, as it had projected a requirement of Rs 77,140.56 crore but was given only Rs 53,214.77 crore.

According to the report, the MoD informed the committee that “allocated funds are optimally utilised towards operational activities” and, “if required, the schemes are reprioritised to ensure that urgent and critical capabilities are acquired without any compromise to operational preparedness of the Defence Services.”

The report mentioned that the CDS said that “you will always find that the projections are normally made about 15 per cent to 20 per cent higher” and called it a “strategic planning process that we adopt”.

According to the report, he said that “we always demand more funds in the hope that the procurement will happen as per the plan but it does not go as per that planning because of the various procurement cycles and the fact that we have to invite tenders sometimes from abroad and sometimes within the country”. After that, he said, the forces “go to a negotiation process, and there is a trial process that we have to go through”. But now, it is “being telescoped so that we can shorten this process and make sure that the budget utilisation happens in a timely manner”, the report mentioned.