Defence Sector – DPP, Missions, Schemes, Security Forces, etc.

Skewed outlay for defence: panel


Mains Paper 3: Economy | Government Budgeting

From UPSC perspective, the following things are important:

Prelims level: Capital, revenue expenditure

Mains level: Defence modernisation and issues related to it

Decreasing share of capital allocation in the defence budget

  1. Parliamentary Standing Committee on Defence has expressed concerns over the decreasing share of capital allocation in the defence budget compared with the revenue component
  2. Committee said the Defence Ministry should overhaul its planning and budgeting mechanism to ensure a prudent and equitable distribution of funds to revenue and capital heads

Capital and revenue heads

  1. The revenue component caters to salary, other recurring expenses, requirement of stores, transportation, revenue works and maintenance and others
  2. The capital component is for procurement of weapons and systems

Decline has become a trend

  1. With each year, the ratio of revenue-to-capital outlay is skewed as the budget for capital acquisitions for the services is declining in comparison to revenue allocations
  2. This is  adversely affecting the modernisation process of our forces

Ministry’s reply

  1. Revenue outlay expenditure follows a pattern due to its inherent characteristics
  2. Capital outlay fluctuates depending on milestone payments and new accruals, which may not necessarily increase every year

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