NEW DELHI: With yet another paltry hike in the defence budget, the modernization of the 1.5-miilion strong armed forces will continue in its slow and haphazard manner, leaving critical operational deficiencies on several fronts from helicopters and howitzers to fighters and submarines. The defence outlay this year is Rs 3.37 lakh crore, which does not amount to even a 2% hike over the revised estimates of the last fiscal.
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The Rs 3.37 lakh crore defence budget works out to just 1.5% of the projected GDP for 2020-2021, which is the lowest such figure since the 1962 war with China. Another Rs 1.33 lakh crore has been allocated separately for defence pensions of retired military and civilian personnel.
Even if the defence pensions are included in the defence budget, it amounts to just 2.1% of the GDP. This when military experts have been demanding that India should allocate at least 2.5% to defence expenditure for building requisite deterrence against China and Pakistan.
The defence ministry (MoD), incidentally, has proposed to the Finance Commission (FC) that a non-lapsable fund should be created for defence acquisitions, which require large capital outlays, because the nature of threats that the country faces “demands complete defence preparedness”. 
The MoD also asked for a levy of special cess, monetization of surplus land and other assets, tax-free defence bonds and utilization of the proceeds of disinvestment of defence PSUs for requisite military modernization. The FC says it will constitute an expert group to examine the proposed non-lapsable fund or an alternative mechanism for arms acquisitions.
The ballooning salary and pension bills of the manpower-intensive armed forces is, of course, a major drag on the defence budget. The capital outlay for new weapon systemRead More – Source
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