Having already spent 65 per cent of its budgetary allocation for capital expenditure, defence ministry is seeking an additional Rs 22,000 crore from the government for defence modernisation at the Revised Estimates (RE) stage. RE allocations are made in December every year, based on the pace of expenditure and future requirements by the ministry.
Sources in the ministry told The Indian Express that by mid-October, the Indian Air Force had already spent 82 per cent of its capital budget, the navy 57 per cent and the army 55 per cent. The overall spending of 65 per cent of capital budget within first six months of the financial year shows a very good pace of expenditure by the ministry, sources added.
Buoyed by this pace of expenditure, the ministry is looking for additional allocation at the RE stage so that more capital acquisition programmes can be signed in this financial year, allowing the armed forces to complete their ongoing modernisation programmes.
Against a projected demand of Rs 1,46,155.54 crore by the defence ministry for the current financial year, the government had allocated Rs 86,488.01 crore under the capital head in the Budget. Out of this, Rs 69,473.41 crore was for capital acquisition, to be used mainly for payments towards procurement of heavy weapons and military platforms. A bulk of this amount goes towards committed liabilities, which is for payments done towards contracts concluded in previous years. The rest of the funds are spent for paying initial installments of contracts signed in the current year.
A higher allocation for capital expenditure of defence ministry in RE would be highly unusual, as every year since FY11-12, government has reduced the budgetary allocations at the RE stage. Last year, an amount of Rs 78,586 crore allocated during the budget was reduced to Rs 71,700 crore during the RE stage.
Due to shortage of funds at RE stage last year, the army told the parliamentary standing committee on defence that it could not make the “initial advance payment of medium-range surface-to-air missile (MRSAM) (Rs 1,579 crore) which has been forwarded to Cabinet Committee on Security (CCS) for approval”. The navy said that it had resulted “in delays in acquiring capability towards modernisation and bridging existing capability gaps”.
By mid-October, the ministry had also spent 59 per cent of its revenue budget which was in keeping with the pattern, as revenue budget gets spent at an even pace over the year. Revenue budget is mainly used for running expenses of the armed forces, which includes salaries, allowances, ammunition, fuel and other such expenditure.