Guns vs Butter-I: House panel welcomes larger funds allocation

The first of a five-part series analyses the military's capex demand versus allocation. The recent report of the parliamentary standing committee on defence provides the backdrop

The 37th report of the 17th Lok Sabha’s standing committee on defence reveals that after five years of under-providing funding for capital expenditure (capex), the defence budget for 2023-24 (FY24) has this year allocated to the defence services the capital funding they projected as their requirement for the year.

In the current system of allocating funding, the Army, the Navy, and the Air Force separately work out their requirement for the year. These projections are sent by the Ministry of Defence (MoD) to the Ministry of Finance for allocation as part of Demand No. 21, which is the “capital outlay on defence services, procurement policy, and defence planning”.

However, the 37th standing committee’s report, which was presented in both Houses of Parliament on March 21, indicates that in 2018-19, the finance ministry allocated just 52 per cent of the services’ capex projection. This rose annually to 59 per cent, 63 per cent, 61 per cent, 68 per cent, until this year’s Budget saw the allocation of 100 per cent of the services’ projections.

In the Revised Estimates (RE) for the same period, the finance ministry allocated just 59 per cent of projections in 2019-20; and then 60 per cent, 77 per cent, and 78 per cent in the following years, to a respectable 99 per cent in last year’s RE.

In the Budget Estimates for FY24, the total projection of the Army, the Navy, and the Air Force was Rs 1.48 trillion, while the capex allocation amounted to the same figure.

“The committee is satisfied to note that the allocation made to the MoD for FY24 has put forth the demand of Rs  37,341 crore, Rs 52,804 crore, and Rs 58,808 crore for the Army, the Navy, and the Air Force, respectively, under capital head and granted the same by the finance ministry, without any deductions,” stated the report.

The report, however, remains mindful of the possibility that supplementary funds might be required, over and above what has been allocated in the Budget. In that case, the finance ministry would have to make additional funds available in the RE.

“The committee, therefore, recommends that it is incumbent upon the ministry to take an insightful analysis of the expenditure of the allocated funds during the first two quarters of the ongoing financial year (2022-23) so that in case of need of a supplementary grant, timely approval can be obtained from the finance ministry at the RE stage,” said the report.

The defence capital outlay provides for land and construction works of the three services, defence equipment, tanks, naval vessels, aircraft, aero engines, and dockyards. This is for various services and organisations of the MoD, including the Army, the Navy, the Air Force, joint staff, Rashtriya Rifles, defence ordnance factories, Defence Research and Development Organisation, Director General of Quality Assurance, National Cadet Corps, and the Directorate General of Married Accommodation Project.