Dismiss Notice
Welcome to IDF- Indian Defence Forum , register for free to join this friendly community of defence enthusiastic from around the world. Make your opinion heard and appreciated.

Defence Budget 2017-18

Discussion in 'Indian Defence Industry' started by Agent_47, Feb 1, 2017.

  1. Sancho

    Sancho Lt. Colonel Technical Analyst

    Joined:
    May 3, 2011
    Messages:
    5,174
    Likes Received:
    3,166
    So how much is the defence budget now and in the last few years?
     
  2. Anish

    Anish Lt. Colonel ELITE MEMBER

    Joined:
    Dec 2, 2011
    Messages:
    5,924
    Likes Received:
    1,789
    Country Flag:
    India
    What is difference between MoD budget and Defence budget ?

    What are the 90000 crores for !!!!
     
  3. Sancho

    Sancho Lt. Colonel Technical Analyst

    Joined:
    May 3, 2011
    Messages:
    5,174
    Likes Received:
    3,166
    Don't know, was curious about that difference too. Will try to check that later when I'm home as well.
     
  4. Agent_47

    Agent_47 Admin - Blog Staff Member MODERATOR

    Joined:
    Aug 3, 2011
    Messages:
    2,793
    Likes Received:
    5,472
    Country Flag:
    India
    Check the first page.
     
  5. Sancho

    Sancho Lt. Colonel Technical Analyst

    Joined:
    May 3, 2011
    Messages:
    5,174
    Likes Received:
    3,166
    Apparently those figures are given by the government / MoD:
    Checked the site, but was not able to find it:
    http://rajyasabha.nic.in/
     
  6. Agent_47

    Agent_47 Admin - Blog Staff Member MODERATOR

    Joined:
    Aug 3, 2011
    Messages:
    2,793
    Likes Received:
    5,472
    Country Flag:
    India
  7. Agent_47

    Agent_47 Admin - Blog Staff Member MODERATOR

    Joined:
    Aug 3, 2011
    Messages:
    2,793
    Likes Received:
    5,472
    Country Flag:
    India
    Defence expenditure: Fantasy replaces deft planning

    In the recent Unified Commanders’ Conference, the Indian military has reportedly asked for an allocation of Rs 26.84 lakh crore for the next 5 years. To put the figure in context, this represents a number that is almost triple of the previous five years’ allocation. The annual simple average of the demand made this time (Rs 26.84 lakh crore over 5 years) would be double the defence budget allocated for the current fiscal (Rs 2.74 lakh crore). The numbers, analysed whichever way, are staggering.

    Let us look at the headline numbers. At current levels, defence expenditure constitutes 2.1 per cent of the GDP. Assuming a 10 per cent nominal growth in GDP (6-7 per cent real GDP growth plus 3-4 per cent deflator, or inflation), the demand for 26.84 lakh crore represents 3.3 per cent of total GDP generated over the next five years. Realistically though, expenditure cannot go up overnight from 2.1 per cent of the GDP this year to 3.3 per cent next year. They will go up gradually, with a “hockey stick” (exponential) increase towards the latter half. However, that also means, given the same numbers (expenditure demand and GDP, over five years), the ratio will likely touch 5-6 per cent in 2022. Very few countries that could manage to sustain such levels of 3 per cent of GDP over 4-5 years in the late 80s ended up with a bankrupt treasury in the 90s.


    Next, how do these numbers stack up on a global comparative basis? It’s an old chestnut in military policymaking, ie, India doesn’t spend enough on defence. Is that correct? There are two benchmarks typically used.

    First, defence expenditure as a percentage of GDP, popularly used, but largely limited in its real policymaking import, as it is not truly reflective of fiscal affordability. As per the World Bank, the numbers stack up as follows: China (1.94 per cent), East Asia-Pacific (1.73 per cent), European Union (1.48 per cent), Republic of Korea (2.64 per cent), Pakistan (3.55 per cent), Russia (4.86 per cent), Turkey (2.13 per cent), Israel (2.38 per cent) and US (3.30 per cent)

    India’s very much in the global ballpark. We are higher than China (and Asia-Pacific average), lower than Pakistan, and in the same range as Turkey and South Korea (both having complex military challenges). Major countries that spend significantly more — US, Russia, Israel — are characterised by very large domestic Military Industrial Complexes (MIC). Military expenditure accounts for large investments and employment in these economies. The situation is quite the opposite in India.

    Second, share of defence expenditure in total government expenditure — less popular, but a lot more insightful for policymaking, as it reflects fiscal constraints.

    It is here that the real constraints become starkly visible. India already spends a very high proportion of government revenues on defence. In fact, defence is the single biggest item in the Union Budget, outside of debt servicing.

    The only major country higher is Pakistan. In a country with significant deficits in social and economic capital, the fiscal space for a bigger share of the pie for defence simply does not exist.

    Lastly, India’s high import-intensity of defence expenditure makes it an inefficient medium to channelise Keynesian boosts to the economy. With 70 per cent of all defence capital expenditure spent on imports (India’s been the top weapons importer in the world now), and low multiplier on military imports, the ability of policymakers to allocate part of government “pump priming” expenditure to defence is absent.

    In a nutshell, plans with numbers like Rs 26.84 lakh crore are pipe dreams rather than effective plans. On top of that, we have a severe issue in terms of quality of military spends.

    In the last 5-6 years, 45-50 per cent of the defence budget has been spent on personnel costs (salaries and pensions). This component is expected to grow exponentially, thanks to more “boots on ground” — Indian Army has expanded by 25 per cent in the last 15 years. And, now the new big daddy of Budget Expenditure is OROP. Increase in personnel costs in the years to come would far outstrip nominal GDP growth.

    This is not new, or even surprising. A generalist MoD bureaucracy and a (largely) hands-off political class have let the military get away with fantastic wish lists in the name of planning. Unless structural changes are brought about in organisation and management, we will continue to have hopes as plans in India’s military.

    http://www.dnaindia.com/analysis/column-fantasy-replaces-deft-planning-2514980

    @Abingdonboy @PARIKRAMA @randomradio @Hellfire @Sancho
     
  8. GSLV Mk III

    GSLV Mk III Captain FULL MEMBER

    Joined:
    Dec 1, 2016
    Messages:
    1,161
    Likes Received:
    1,707
    Country Flag:
    India
    This is as actually incorrect as they only consider the central budget for federal nations.
     
  9. Agent_47

    Agent_47 Admin - Blog Staff Member MODERATOR

    Joined:
    Aug 3, 2011
    Messages:
    2,793
    Likes Received:
    5,472
    Country Flag:
    India
    Defence budget is central only.
     
  10. GSLV Mk III

    GSLV Mk III Captain FULL MEMBER

    Joined:
    Dec 1, 2016
    Messages:
    1,161
    Likes Received:
    1,707
    Country Flag:
    India
    Yes, but this makes it look like we spend the same percentage of our total budget expenditure on defence, which we don't.
     
  11. Agent_47

    Agent_47 Admin - Blog Staff Member MODERATOR

    Joined:
    Aug 3, 2011
    Messages:
    2,793
    Likes Received:
    5,472
    Country Flag:
    India
    Not wrong if others are the same.
     
    GSLV Mk III likes this.
  12. Hellfire

    Hellfire Devil's Advocate Staff Member MODERATOR

    Joined:
    Apr 16, 2017
    Messages:
    1,847
    Likes Received:
    4,484
    Country Flag:
    India


    Am still wondering when did India have 'deft' planning in defence? Or for that matter, anything? Apart from the 1st 5 year plan which met it's objectives, at every successive stage, we have not only not achieved the targets set, but at times, have failed miserably at it. I can make out where this topic is headed.


    Ah, the intellect of the author is evident here, when he clearly fails to factor in the fact that 95% of the present allocation of the defence budget to army (note how I have used the words to army because the sum total of Defence Budget is not exclusive for Armed Forces only but also includes ancillaries like Military Engineering Services, DRDO, DRDL, etc, basically all under head of MoD) goes towards revenue expenditure (as per ASEC - Army Standing Establishment Committee - the nodal agency for Human Resources planning and drafting directives/policies on creation/abolition of posts/cadres) which is only catering to pay and allowances (read in light with implementation of 7th CPC, the adjusted figures cater for backpay only) and hardly any worthwhile capital is moving into the Capital Head expenditure .

    Again misleading figures posted by the OP. The allocation is 2.14% of GDP to Ministry of Defence. This is inclusive of the pension 'burden' (politicians call paying pension to soldiers as burden, right for themselves :)). The allocation to defence is 1.56% of GDP. The figure is being twisted for the agenda which follows.

    Source: http://www.idsa.in/issuebrief/india-defence-budget-2017-18_lkbehera_030217

    And then the GoI also introduced the Customs Duty on import of defence equipment, which is paid out of the MoD (Defence Allocation head). Funny how the OP has been consistently hiding pertinent facts. (obviously it shall erode his

    Second, share of defence expenditure in total government expenditure — less popular, but a lot more insightful for policymaking, as it reflects fiscal constraints.

    True, especially in light of friendly Pakistan on West and China in North. I may as well change my religion and start speaking Chinese.

    And then the OP has a problem with higher expenditures. When the OFBs and DPSUs have not only performed poorly, but continue to fail (deliberately) without accountability, who is to blame? The rot is within the Indian society. Sorry, there is no 'chalta hai' attitude. There is only sheer laziness and selfishness in every Indian concerned. The nation be damned.

    When the Chinese in the other forum call Indians dumb, I agree with them. 95% are sheer idiots. And the democracy, nay the tyranny of democracy is that the remaining 5% are being made idiots!

    True. Maybe the bureaucrats and the politicians need to sit and decide that security has a political cost, not military solution! Everywhere the strife is existing because of sheer stupidity of politicians and bureaucrats. Stop blaming the armed forces. If you want, let the armed forces take over and see the fun. The matters will be settled more with talks and less with war, as the soldier is 'invested' and has an interest to protect in peaceful co-existence.

    :hitwall:
     
    Abingdonboy, Blackjay and randomradio like this.
  13. randomradio

    randomradio Mod Staff Member MODERATOR

    Joined:
    Nov 22, 2013
    Messages:
    10,842
    Likes Received:
    5,830
    Most of these articles are written by left wing commie retards. Nothing new there.
     
  14. Abingdonboy

    Abingdonboy Major Technical Analyst

    Joined:
    Oct 18, 2016
    Messages:
    2,742
    Likes Received:
    12,270
    Country Flag:
    United Kingdom
    This is why the tax base needs to be increased, India has a very similar GDP to the UK and France and actually spends less as a proportion of GDP on defence than both of them but the defence budget makes up a massive proportion of the total govt budget. GoI needs to increase its revenues, almost 17% of its total spending going on defence is a travesty.
     
    snehil aditya likes this.

Share This Page