Defence under-expenditure, again

The defence ministry surrendered 10% of its capital allocations last year

In the Union Budget 2008-09, unveiled by Finance Minister P Chidambaram in parliament today, the budgeted capital outlay for defence services has been increased from Rs 41,922 crore to Rs 48,007 crore, by around 14.5%.

That’s good news for military modernisation. If the albatross-like procurement policies would actually allow this money to be spent. Of the Rs 41,922 crore outlay in last year’s budget, the actual spending was only Rs 37,705 crore. In other words, the defence ministry surrendered just over 10% of its allocated capital budget because it couldn’t spend it. Significant among the spending shorfalls were: the Indian Air Force’s Rs 1843 crore and the Army’s Rs 940 crore under the head “Other Equipment”.

With the government showing no real signs of reforming defence procurement we can expect a similar shortfall this year.