The need to hike Defence Budget to enhance Atmanirbhar Bharat
31 Jan 2021 10:00:04
The Year 2020 started with a remarkable beginning in the defence sector as the 11th edition of Defence Expo at Lucknow from 5-8 February 2020 was conducted. Over 200 partnerships involving the signing of a memorandum of understanding (MoUs), transfer of technology and product launches took place on the third day of DefExpo-2020 at a ceremony called Bandhan.
Though the pandemic played as a spoilsport last year, a new beginning for Bharat has already started. The government led by PM Narendra Modi, showing the map of Atmanirbhar Bharat initiative to make India self-reliant, has made possible the making of indigenous products, types of equipment, weapons, and much more in the defence sector. Following this, India is looking at different geopolitical situations along the entire Line of Actual Control (LAC). With several troops being deployed at both sides, India has strengthened its capability to stand firm against China's People Liberation Army (PLA).
Defence Budget 2020 -
For the Year 2020 – 2021, there was a hike but less than two per cent hike over the Revised Estimates (RE) for the Year 2019-2020. The allocation of Rs 3.37 Lakh Crores for 2020-21 constituted nearly 1.5 percent of the projected GDP and therefore the Capital allocations were not enough for fulfilling the committed liabilities. And, if the pensions for the defence personnel are added then the budget outlay for 2020-21 stood at Rs 4.71 lakh crore.
Dealing with increasing threats from China and Pakistan -
On one hand, Pakistan is making several attempts to infiltrate terrorists in Kashmir and provoking Indian Army through ceasefire violations. On the other hand, China has been engaged with India in border standoff since May in which 20 Indian soldiers were martyred. Since then, tensions have escalated along the Line of Actual Control (LAC) with China from Ladakh to Sikkim and Arunachal Pradesh. This has resulted in amassing troops on both sides with India finally occupying some strategic peaks and gaining the upper hand.
Due to the major developments in the situation around LAC and LOC in the past year, the defence budget for 2021 is expected to go up to counter these "threats". Though there has been a 40% increase in their defence budgets among Southeast Asian countries, COVID-19 pandemic has forced many of these countries to cut their military spending in 2020.
Atmanirbhar Bharat
However, due to these 'threats', it has resulted in bringing up the Atmanirbhar Bharat initiative by PM Modi. Aligning with this vision, Defence Acquisition Procedure 2020 unveiled. It aims to give impetus to the growing domestic industry and achieve enhanced self-reliance in defence manufacturing. It is being adopted in all the Armed forces. For e.g. Out of 43 ships ordered for the Navy, 41 are being built indigenously and AoN exists for construction of 44 ships and submarines to be built indigenously. There are reforms announced under defence products that will strengthen Atmanirbhar Bharat -
1. Increase of FDI cap to up to 74 per cent under automatic route: The DPIIT has increased the FDI limit in the defence sector from 49 to 74 per cent under automatic route and beyond 74 per cent through the government route. This would "result in access to modern technology or for other reasons to be recorded. This will enhance Ease of Doing Business and contribute to the growth of investment, income and employment.
2. Time-bound defence procurement process and faster decision making: A Project Management Unit (PMU) has been mandated to support contract management. It will facilitate obtaining advisory and consultancy support in specified areas to streamline the acquisition process.
3. Corporatisation of Ordnance Factory Board (OFB): There is a need to be self-reliant for which India needs an efficient defence manufacturing set up and it can happen through the corporatisation of OFB.
4. Creation of a Capital Budget for domestic procurement: In August 2020, it was announced that the MoD has bifurcated the capital procurement budget for 2020-21 between domestic and foreign capital procurement routes. A separate budget head has been created with an outlay of nearly Rs 52,000 crore for domestic capital procurement in the current financial year.
5. Creation of a negative list of import: A list of 101 items has been notified on which there would be an embargo on the import beyond the timeline indicated against them.
With these reforms, a major impetus will be created during planning and procurement (which are in progress) of equipment for the Armed forces, wherein, there is an endeavour to support the emerging defence industry in the country. This will in turn help to make India self-reliant. In order to this happen, there is a need to hike the Defence Budget to enhance Atmanirbhar Bharat that will help to counter the emerging threats from our so-called 'neighbours'.