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Despite hefty hike in Budget allocation -- Defence spend to stay low

Hema Ramakrishnan

NEW DELHI, Oct. 29

THE hefty hike in the defence budget during the current fiscal notwithstanding, the Finance Ministry anticipates actual expenditure to be below the budgeted allocation.

With the actual outgo so far this year below the proportionate budgeted levels, preliminary estimates point to a 25-30 per cent savings in capital expenditure on the enhanced allocations made for 2000-01, said a senior official.

The exact quantum of savings would be known by the end of November when the revised estimates are firmed up.

The total allocations on defence (revenue plus capital outlay) was pegged at Rs 58,587 crore for 2000-01 - up by nearly Rs 13,000 crore over the Budget Estimate for 1999-2000. The hike was justified on the grounds of enhancing defence preparedness in the post-Kargil scenario. It was also pointed out that the country required to make major hardware purchases given that no significant acquisitions had been made over the past decade.

Of the total budgeted defence expenditure for the current fiscal, Rs 40,660.60 crore was on the revenue account and Rs 17,926.40 crore on the capital account. As against this, the budgeted revenue and capital outlays stood at Rs 33,464.32 crore and Rs 12 ,229.68 crore in 1999-2000.

Officials point out that with a long lead time entailed in finalising procurement contracts, it may be difficult to expect the Defence Ministry to evenly space out expenditure.

Funds are also parked with defence public sector units which are yet to finalise purchase contracts. The procedures involved are also complex considering that major price negotiating committees are expected to scrutinise each of these deals.

The capital outlay on defence services for the current fiscal includes, among other things, procurement of aircraft and aero engines, heavy and medium vehicles and other equipment for the three forces.

The budgeted provision for purchase of aero-engines and aircraft by the Air Force was Rs 3,200 crore for 2000-01. The budgetary outlays for the Army and Navy stood at around Rs 189 crore and Rs 285 crore respectively.

A provision of around Rs 281 crore was made for the procurement of heavy and medium vehicles by the Army. The latter was also allocated around Rs 2,764 crore for the purchase of other equipment. The provisions under this head for the Navy and Air Force s tood at Rs 181 crore and Rs 835 crore respectively.

A hefty allocation of Rs 2,431 crore was also made for naval fleet and around Rs 375 crore for naval dockyards. The budgetary outlay on research and development stood at around Rs 711 crore. Although roughly the same outlay was provided for R&D in 1999-2 000, the levels were scaled down to Rs 570 crore in the revised estimates.

While capital outlay accounts for roughly 30 per cent of the total non-Plan allocation in defence, the balance 70 per cent comprises expenditure on the revenue account - mainly the wage and pensionary liabilities of the three forces.

Budget parleys from tomorrow

The Finance Ministry is scheduled to kick off the pre-Budget meetings with all other Central Ministries and Departments from October 31.

The exercise - which will include firming up of the revised estimates for the current fiscal - will begin with the smaller Ministries. Officials said that deliberations with larger ones such as Defence and the Railways would be taken up at a later stage. In any case, all the pre-Budget inter-Ministerial parleys will be completed by the end of November.