Source: The article “More money for defence, now fix the process” is an editorial published in The Hindu. It analyses recent Union Budget allocations for the defence sector, focusing on procedural and structural issues beyond funding.
UPSC Syllabus: GS Paper-3- Indian Economy
Context: India’s most recent defence budget signals a clear departure from years of stagnation, as it records the first sustained double-digit rise in allocations and brings defence spending to around 2% of GDP.
Key Features of the Defence Budget
- The total defence allocation stands at ₹7.84 lakh crore, accounting for 7% of total government expenditure.
- A major positive shift is the rise in capital expenditure to 27.9%, correcting years of over-reliance on revenue spending.
- The Indian Air Force and Army receive substantial hikes for platforms, heavy vehicles and weapons, strengthening deterrence across theatres.
- Pension and salary shares have declined compared to FY20, indicating gradual rebalancing away from manpower-heavy expenditure.
- Boost to Indigenisation and Defence Industry
- Around 75% of capital acquisition is reserved for domestic industry under Aatmanirbhar Bharat.
- Defence production has risen sharply since 2014, and exports have grown from ₹1,000 crore to over ₹23,000 crore, reflecting industrial maturity.
- Indigenous manufacturing in areas like mobility equipment and shipbuilding has strong employment and growth multipliers.
Structural Constraints and Risks
- A weakened rupee reduces the real purchasing power of capital allocations, especially for imported platforms.
- Persistent bureaucratic delays, rigid procurement norms like the L1 rule, and absence of assured demand discourage innovation and MSME participation.
- Long-pending projects (e.g., submarines, fighter aircraft) highlight chronic acquisition delays and result in under-utilisation of funds, with capital allocations often lapsing.
- The absence of a Non-Lapsable Defence Modernisation Fund continues to hinder long-term planning.
- R&D and the Capability Gap
- While allocations to DRDO and allied institutions have increased, research remains fragmented and poorly integrated with production.
- India’s overall R&D spending remains low at 66% of GDP, with minimal private-sector participation, limiting technological leapfrogging.
- Reframing Defence Spending
- Viewing defence through a narrow “guns vs butter” lens is misplaced.
- Defence investment supports border infrastructure, manufacturing ecosystems, employment, and strategic autonomy, aligning with the vision of a $30-trillion Viksit Bharat economy.
Way Forward
- Streamline defence procurement processes to reduce delays and cost overruns.
- Strengthen indigenisation and defence manufacturing under Atmanirbhar Bharat to reduce import dependence.
- Prioritise capital expenditure and R&D for modernisation and future warfare needs.
- Enhance jointness and integrated planning among the armed forces to ensure efficient utilisation of increased funds.
Conclusion
The FY27 defence budget reflects ambition, realism, and improved prioritisation. Yet, its success will depend on process reform, faster acquisition, integrated R&D, and predictable funding mechanisms. Without fixing structural bottlenecks, higher spending risks diminishing returns. If execution matches intent, India can convert this budgetary push into durable military capability, industrial strength, and strategic autonomy in an increasingly contested global order.
Question: Despite increased defence budget allocations, India faces several challenges in defence procurement and utilisation of funds. Discuss the key limitations and suggest a way forward.
