Defense Capital Outlay Could Be Insufficient For Procurement Commitments

India hiked its military spending by 12.43%. Finance Minister Arun Jaitley allocated $38 billion in the budget for 2014-15.

Increase in capital expenditure by $831 million may not necessarily mean more money for weaponry acquisitions compared to February’s interim Budget. The day-to-day expenses and salaries together itself amount to $22 billion.

The $15.7 billion now allocated for the defense capital expenditure has been divided under various parts. Under the “aircraft and aero-engine component”, the Indian Air Force (IAF) has been allocated $2.7 billion. The Army and IAF have been allocated $2.5 billion and 2.5 billion while 2.1 billion has been allocated for modernization of the naval fleet.

From the hike in capital expenditure, $166 million has been allocated for development of the railway system in border areas. $665 million could be utilized for part of the DRDO’s research and development activities including acquisition of heavy machinery and infrastructure development.

A majority of the cost outlay will be spent for existing commitments leaving less space for newer procurements. The armed forces are struggling to maintain existing weapon systems and platforms, leave alone inducting new ones.

There are several proposed deals still to be inked in the current financial year 2014-15 that began from April 1 this year. The most important deals include mega-deal for 126 (MMRCA) combat aircraft for the IAF, attack helicopters for the IAF, the ultra-light howitzer (ULH) artillery gun deal for the Army, and multi-role helicopters for the Navy.

This also points out the unyielding financial condition being faced by the government.