9% hike in defence budget allocation likely this year

India’s defence budget is likely to see a modest hike of 9% to Rs 2.68 lakh crore in 2016-17 while thepension bill alone may go up by over Rs 80, 000 crore.
Further the defence ministry is likely to surrender Rs 12,400 crore, or 16% of the Rs 77,406 crore earmarked for acquisitions under the capital head since several projects could not be processed on time by the three service headquarters, officials told ET.
If pensions and civil expenses of the ministry are also counted, the budget for 2016-17 will increase about 13% to Rs 3.5 lakh crore from Rs 3.1 lakh crore. The pension bill is set to zoom in the next fiscal owing to the expected implementation of the one rank, one pension plan. The total payout for the current fiscal is still unclear.
In 2015-16, Rs 77,406 crore of the Rs 93,675 crore allocated to the defence ministry was earmarked for acquisition of weapon systems for the three forces. The forces have not been able to exhaust their committed liabilities this year in some cases. Officials said this happened because the payments for previous procurements are to be disbursed after reaching certain milestones such as the delivery of a weapon system or a developmental achievement. “In some cases, deliveries or milestones could not be ensured on time by the departments.
This has resulted in some funds for committed liabilities also lapsing,” a senior official said on condition of anonymity. The government has brought in several reforms this year to speed up the acquisition process.

ET