Monday, February 29, 2016

Surprise, $50 billions for Defense

Surprise, $50 billions for Defense

The finance minister announced a whooping $50 billion defense budget with an average hike of 20% from last year, however the increased amount will be spend on the OROP pension bill only, and defense minister gives up nearly $1.5 billion unspent amount from last years budget. the pension bill alone costs some $11 billions, which gives nearly $39 billion for armed forces.  

OROP and Arrears 82,000 cr $12 b
Capital Acquisition 78,587 cr $11.4 b
Salaries and Allowances 1,43,869 cr $21.1 b
Other Expenditure 37,400 cr $5.5 b
Total 3,40,922 cr $50 b

It's a major backdrop in the defense budget is the huge cut in capital acquisition funds, the funds who used to buy new defense hardware's from abroad and from Indian companies, this acquisition cuts comes after defense minister gives up nearly $1.5 billion unspent amount from last years allocation.

In the current fiscal year, the defense ministry allows to spend nearly $11.4 billions to buy new defense hardware's. this seems very less compared to previous budget allocation, this may further slow the defense modernization. Contracts like FGFA, AMCA engine, Construction of IAC 2 and Army MR SAM costs so much. It's highly unlikely the armed forces won't get new contracts.

Also there is no clear information available on modernization of central armed forces operating under the defense ministry, such as Coast Guard, Assam Rifles, Special Frontier Forces and Andaman Nicobar command. This seems surprise that internal security modernization details also not disclosed in the budget session.

In the $50 billions, only $38.5 billions going to be spend on armed forces, nearly $11 billions spend for pensions. the rival China spends nearly $140 billions every year, with nearly $60 billions for acquisitions. way ahead of Indian defense spending.

It's clear the defense forces remain spend more than 60% of money to the salary's, allowances and other personal expenditure's. as once Doval stated this "more manpower costs less war preparedness". Many analysts suggest the defense ministry to cut the troops number by 7 lakh. which can shave more than 20% of salaries and allowances.

There is some other concerns about controlling the attrition damage, keeping the forces maximum defense preparedness by increasing the weapon stockpiles. Many sources confirms that armed forces have ammunition for only 20 days, than the required/authorized stockpile of 40 days. the issues in storage also remain concern that CAG once found corrosion in anti tank shells stored in the reserves.

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