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Budget 2019: Defence allocation
Why is it in news?
- There is disappointment in the military and industry over the defence allocation in the Union Budget.
- There are also questions on the overall military modernisation and the big-ticket deals lined up for conclusion this year as there are no resources left for new procurements.
More in news
- Allocation not matching committed liabilities:
- The capital expenditure allocated for the Navy and the Indian Air Force (IAF) does not meet their committed liabilities this year.
- Services had taken up the matter with the Defence Ministry after the interim Budget.
- Committed liabilities: These are payments for deals already signed and typically spread over several years. The remaining part of the capital head goes for new procurements.
- Industry downcast: The industry too has given the thumbs down to the defence budget.
- FDI: Easing of Foreign Direct Investment (FDI) is expected but the decision on it was excluded.
- Lower allocation than committed liabilities:(1) IAF major deals: The IAF which has signed major deals in the last few years including the 36 Rafale jets, S-400 air defence systems and is beginning to induct platforms like CH-47F Chinook heavy lift and AH-64 Apache attack helicopters has committed liabilities of ₹47,400 crore.(2) Navy major deals: It includes- deal for 24 MH-60R Multi-Role Helicopters from the U.S. valued at $2.6 billion, a proposal for 10 more P-8I long range maritime patrol aircraft estimated to cost over $3 billion.
- No money left for new deals: This means the Navy and Air Force have no money left for new deals, and may default on earlier payments as well.
- Waiver of basic customs duty: The only relief the services were given was waiver of basic customs duty for import of equipment not manufactured in the country. That would ease the situation only a bit given the requirements of the three services.
- Below table indicates allocated and committed liabilities:
Source
The Hindu