Economics of Defence and Budgetary Reforms by Major General (Dr) Pritam Bishnoi, VSM
At INR 4,78,195.62 crores, the Ministry of Defence’s budget estimate for FY 2021-2022 rose by a nominal 1.4%; though in light of the pandemic-induced economic downturn and healthcare expenditure, emergency defence procurement amounting to INR 20,776 crores that India has had to make in the face of an increasingly belligerent and assertive China, and the absence of any increase in taxes or the imposition of a COVID cess, even such a bare increase should not be judged too harshly. On the contrary, defence spending stands at 13.7% of the total budget and incorporates many noteworthy changes that indicate a much-needed course correction towards a more efficient use of finances. While the budget allocated to defence pensions has reduced by 13.4%, capital outlay on defence services, i.e., funds used to buy new equipment and aid the military’s modernization, has increased by 18.75%.
As the fourth largest military spender in the world, India has a huge defence economy supported by a budget amounting to nearly $67 billion in 2020–21. This book examines how well India’s defence economy is managed, through a detailed statistical exposition of five key themes – defence planning, expenditure, arms production, procurement and offsets. This book is based on hard-core evidence collected from multiple government and other credible sources including the ministries of Defence, Finance, and Commerce and Industry, Comptroller and Auditor General of India and the Reserve Bank of India. It discusses key issues such as the evolution of India’s defence plan; the feasibility of increasing defence spending; India’s defence acquisition system; and the recent reform measures taken under ‘Make in India’ initiative.