India spent ₹20,776 crore on emergency defence purchase amid border row
This year’s budget (excluding pensions) is a 1.62% of the country’s gross domestic product. If defence pensions in the budget are taken into account, the budget accounts for 2.14% of the GDP.
The defence budget (excluding pensions) is 10.4% of the government’s total expenditure for 2021-22. If pensions are counted, it is 13.72% of the total expenditure.
Overall, India has set aside ₹4.78 lakh crore for military spending in its budget for 2021-22, compared to last year’s ₹4.71 lakh crore — both figures include defence pensions. This translates into an increase of 1.45%.
But if defence pensions are not taken into account, this year’s military spending stands at ₹3.62 lakh crore, compared to ₹3.37 lakh crore last year — an increase of 7.3%. Budget documents show that the government’s defence pension bill will be lower than last year – down from ₹1.33 lakh crore to ₹1.15 lakh crore. Last year it was higher as ₹18,000 crore was paid out as pension arrears, officials said.
Briefing reporters, Sitharaman said the government agreed in-principle to provide a non-lapsable fund for defence for the first time in line with a recommendation made by the 15th Finance Commission. This will help military modernisation as unspent funds will not have to be returned at the end of the year.
The allocation under the capital head has been significantly increased, the defence ministry said in a statement. “The allocation represents an increase of 18.75% over FY 2020-21 and 30.62% over FY 2019-20. This is the highest ever increase in capital outlay in the last 15 years,” the ministry said.
An 18% increase in budgetary allocation for capital procurement goes some way in recognising the urgent need of modernisation and weapon enhancement requirements of the armed forces, said Anuj Prasad, head (aerospace and defence), Cyril Amarchand Mangaldas.