Rs 10-12k crore savings in defence capital outlay

The Centre expects savings of Rs 10,000-12,000 crore on capital outlay in the defence sector for 2016-17.

This will help budget planners to close the fiscal gap in a year of massive outlay on the pay commission and capital spending, and possible revenue shortfall in some items, including strategic divestment and telecom spectrum sales.

The budgeted capital outlay for the military is Rs 79,000 crore. The revised estimate for 2015-16 was Rs 74,300 crore, about Rs 11,600 crore less than the budgeted estimate.

In fact, the Centre regularly sees annual savings on the defence capital outlay. For two reasons. First, the defence ministry’s rather arduous and complicated acquisition policy. So, military hardware seldom gets acquired in the intended time frame. Second, whenever the finance ministry needs spending cuts to meet the fiscal deficit targets, defence capital is one of the first items to take a hit.

“We can expect some savings. Defence revenue spending is fully utilised, especially with the pay commission. But, on the capital side, there will be savings,” said a senior official.

The pay commission and higher military pensions outgo has meant an additional Rs 85,000 crore, even with allowances deferred.

The target from telecom spectrum auction was Rs 64,000 crore but in the current year, the Centre will get only half this much. Part of the shortfall could be filled by about Rs 15,000 crore from the (concealed) income disclosure scheme.

And, with eight months gone, the Centre has barely started on its Rs 20,500-crore strategic sale programme in state-owned companies.