The defence budget was increased by a mere 7.81 per cent to Rs 2.95 lakh crore against last year’s Rs 2.74 lakh crore, belying expectations of a significant hike when the armed forces are facing growing challenge on the borders with both Pakistan and China.
In his budget address, Finance Minister Arun Jaitley said the government will develop two defence industrial production corridors and bring out an industry-friendly military production policy to promote the domestic defence industry.
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Out of total allocation of Rs 2,95,511 crore for defence budget, only Rs 99,947 crore has been set aside for capital outlay to purchase of new weapons, aircraft, warships and other military hardware.
The allocation has been estimated at around 1.58 per cent of the GDP and 12.10 per cent of the total budget of Rs 24,42,213 crore for 2018-19.
Interestingly, the defence ministry had to revise the figure for the budget from Rs 3.05 lakh crore, as announced earlier, to Rs 2.95 lakh crore for the financial year 2018-19.
A key defence panel had in December recommended that the government must increase defence budget in 2018 to meet up the global standard of 2-2.5 per cent of GDP. Currently, the Indian defence budget was merely 1.62 per cent.
However, Minister of State for Defence Subhash Bhamre opines that even as the share of defence budget has fallen, the total amount has increased from Rs 2,46,727 crore in 2015-16 to Rs 2,59,261 crore in 2017-18. A decent hike of 11.3 per cent will further help ease the pressure on the ministry.
Ensuring adequate budgetary support to the Defence Sector will be the priority of the Government. Presenting the General Budget 2018-19 in Parliament today, the Union Minister for Finance and Corporate Affairs, Shri Arun Jaitely said that a lot of emphasis has been given to modernizing and enhancing the operational capability of the Defence Forces over the last three and a half years.
The Finance Minister appreciated the stellar role played by the Armed Forces in meeting the challenges on the country‟s borders as well as in managing the internal security environment both in Jammu and Kashmir and the North East.
A number of initiatives have been taken to develop and nurture intrinsic defence production capability to make the Nation self-reliant for meeting our defence needs, the Finance Minister explained.
The FM said that private investment in defence production has been opened up including liberalizing foreign direct investment. The Government will take measures to develop two defence industrial production corridors in the country. The Government will also bring out an industry-friendly Defence Production Policy 2018 to promote domestic production by public sector, the private sector and MSMEs, he said.
Watch the full budget speech by Finance Minister Arun Jaitley here: