March 17, 2017
Pratima Mandal speaks on Demands for Grants for Ministry of Defence
National Security is the most important thing for our country to maintain peace and stability both within and outside the country. India’s strategic location is crucial both for the South Asian region and for the whole world. Of late, terrorism, insurgency and sectarian conflicts are on rise both at national and international arena. Internal security is under threat from cross border terrorism, militancy in the North-East, Left-Wing extremism and terrorism in the hinterland.
Madam, while announcing the allocation for defence, the Finance Minister avoided any mention of the previous year’s allocation. Perhaps it was for a reason. At Rs 2,74,114 crore – excluding the outlay of Rs 85,740 crore for defence pension – it was only 6% more than the comparable Budget Estimate of Rs 2,58,589 crore for 2016-17. The allocation is grossly inadequate to meet the security needs of the country.
The noticeable feature is the gradual decline in the defence budget share in both Central Government expenditure and the GDP with a share of 1.56% of the estimated GDP for 2017-18. This budget is the lowest since 1956-57. Madam, the revenue stores and capital modernisation together play a vital role in the operational preparedness of the Armed Forces. The combination shared of these two elements has declined from 55 per cent in 2007-08 to 40 per cent in 2016-17. The present ratio needs to change for the better for which the allocations under revenue stores and capital modernisation need to be augmented substantially.
Among the Defence Services, the Indian Army, with a budget of Rs 1,49,369 crore, accounts for the biggest share in the Defence budget, followed by the Air Force, the Navy, the DRDO and the ordnance factories. But the bulk of the Army’s budget, nearly 85 per cent goes into meeting pay and allowances. Only 17 per cent of the Army’s total allocation has been earmarked for capital expenditure, whereas for the Air Force, it is 58 per cent and for the Navy, it is 51 per cent.
Madam, under the head of modernisation, the Army’s fund has been decreased by 6.4 per cent and the Navy’s by 12.1 per cent; only the Air Force’s fund has been increased, by 12.1 per cent. The increase in the Air Force’s budget is in the view of its signing several mega-contracts like Rafale fighters and Chinook heavy-lift helicopters. Madam, only 12 per cent of the total modernisation budget of Rs 70,000 crore is available for the signing of new contracts. There is a whooping under-utilisation of funds of Rs 7,393 crore and the Army accounts for 50 per cent of the total unspent funds. Under-utilisation of funds has become a recurring feature of the Indian Defence budget because of the Finance Ministry’s machinations. Poor allocation, coupled with under-utilisation, is severely affecting modernisation and procurement.
Unlike in the previous Budget, this Union Budget has not provided any specific incentive to push the Make in India initiative in the defence sector. There is a reduction on income tax to 25 percent from 30 percent for the micro, small and medium enterprises with an annual turnover upto Rs 50 crores. This may benefit six thousand MSME’s which supply components to DRDO, defence public sector undertakings, ordnance factories and large private companies. Perhaps infrastructure status, which has been given for affordable housing should have been giving for availing tax benefit which is a long pending issue.
There is only a mere five percent increase into official defence budget and is grossly inadequate, taking the inflation and external and internal trade into consideration. Madam, we are a country that has one of the largest armed forces. They selflessly do the work that we cannot imagine to do for a day. It is unfortunate that they are not receiving the support they deserve. The fact that our country allocates crores every year on defence but hardly provides adequate funds to support these courageous souls is of great concern to us.
Winston Churchill had said: “ We sleep soundly in our bed because rough stand ready in the night to visit violence on those who would do us harm”. So, even one soldier treated improperly is unacceptable to us. I appeal to consider increasing the defence budget allocation specially to support not only our serving soldiers but war veterans struggling to survive physical, psychological and financial trauma.
Thank you, Madam, for giving me the opportunity to speak.