Defense Budget 2021: Budget allocation, Military Modernization and Chinese threat

There was no significant increase in the overall defense budget, but India did spend an additional unbudgeted Rs 20,776 crore on emergency arms procurements in the current fiscal in face of China’s ongoing belligerence on the northern borders, especially in eastern Ladakh.

The overall defense expenditure for 2021-2022 has been increased to Rs 4,78,196 crore 1.4% more than last year’s budgetary allocation of Rs 4,71,378 crore. However, the capital outlay for military modernization has been hiked by almost 19% to Rs 1,35,061 crore from last year’s budgeted Rs 1,13,734 crore. “This is the highest-ever increase in capital outlay for defense in 15 years,” said defense minister Rajnath Singh.

I specially thank PM& FM for increasing the defence budget to 4.78 lakh cr for FY21-22 which includes capital expenditure worth Rs 1.35 lakh crore. It is nearly19 percent increase in Defence capital expenditure. This is highest ever increase in capital outlay for defence in 15yrs

— Rajnath Singh (@rajnathsingh) February 1, 2021

The increase by Rs 20,776 crore in the revised estimates for 2020-2021 over the budgetary estimates show the emergency procurements India has made from countries like the US, France, Russia, and Israel to bolster its operational military readiness after multiple Chinese intrusions into eastern Ladakh last May. These range from different missiles and precision-guided munitions to drones, assault rifles, and specialized winter clothing and equipment.

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The 4.78 lakh crore defense budget also includes Rs 1.15 lakh crore as defense pensions for retired military and civilian personnel. It works out to just 1.63% of the projected GDP for 2021-2022 if the pension bill is excluded, and 2.15% if it is not.
Defense experts claim that India should allocate over 2.5% to defense expenditure for building adequate deterrence against China and Pakistan, the collusive threat from both countries has increased in recent times.

Without much concrete planning to systematically build military capabilities and the persisting budget constraints, the 15-lakh armed forces continue to suffer from operational deficiencies on several fronts, ranging from fighter jets, submarines and helicopters to drones, ammunition and night-fighting capabilities.

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India may be among the top five countries in terms of military expenditure, it does not get adequate equipment for its worth. The maintenance of the armed forces pay and pensions consume the bulk of expenditure, leaving less for the desperately-needed military modernization.