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India-China standoff and India's Defence Budget

Much before the presentation of the Budget 2022 in the Lok Sabha, it was in the air that defence budget will be hiked in the face of India-China standoff at Ladakh.


Sentinel Digital DeskBy : Sentinel Digital Desk

  |  19 Feb 2021 4:45 AM GMT

Udayan Hazarika

(The writer can be reached at

Much before the presentation of the Budget 2022 in the Lok Sabha, it was in the air that defence budget will be hiked in the face of India-China standoff at Ladakh. There was also the view that as huge extra budgetary spending has already been made in the current fiscal, there will rather be a squeeze in the defence Budget. However, when finally the Budget 2021-22 came up, we all saw that compared to the current year's total, the defence budget has gone down marginally by about 01.37 per cent for FY 22. The issue of cut in the defence expenditure has been a matter of discussion in various quarters.

In this context, let us examine the ground realities. Why we wish to have more funds in the defence budget? Evidently the recent happenings in the northern and western borders along the line of actual control are the major cause of concern. The impact of the much-talked Chinese intrusion at Galwan valley and Pongong Tso lake of Ladakh will here to stay for at least another year to come - the statement made by the Defence Minister recently on the disengagement treaty leads us to believe that way. There are controversies taking into account of the issue of intrusion, especially when the government statements have been contested openly by the opposition. Recently (February 10) Union Minister of State for State Transport and Highways who was also the former Army Chief had made a statement that "the border with China had never been demarcated. China had transgressed many times over the years with its own perception of the LAC. Similarly, none of you come to know how many times we have transgressed as per our perception. Chinese media does not cover it," This raises three basic questions i) with what capacity the Union Minister of Transport had made that statement? Was it also the Government's view? ii) Was not it unwarranted from the part of a person of the status of Union Minister to comment that both sides had concealed the fact of frequent intrusion from public? iii) Knowing very well the position about LAC what the government had done to eliminate the confusing perception? Evidently, this confusing perception itself had led to happenings on the 5th May 2020 which took life of our 20 soldiers. Moreover, this statement was also made under the backdrop of the Prime Minister's unequivocal announcement that "Neither anyone has intruded into our territory nor taken over any post. Our forces are doing what they have to do to protect the country, whether it is deployment, action or counter-action…." With this statement of the Prime Minister, the controversy about intrusion should have ended here. But even this was contested by the opposition. Clear satellite images were projected in the media showing the advanced position of the Chinese (PLA) as on June 18, 2020 (June 25, TOI, HT) and there was no counter from the part of Government on the depiction. The latest of the event is the start of the disengagement process following a truce between the parties which the Chinese Defence Minister announced on 10th February while the Indian announcement came 24 hour late on 11th February. As per the announcement the process of disengagement is a long one and by far only some tanks have been removed. Long areas of frictions still marked as disputed and both sides are carrying out bilateral discussions. In the statement made by the Defence Minister in the Parliament it was categorically stated that "I want to assure this House that in these talks we have not conceded anything. The House should also know that there are still some outstanding issues with regard to deployment and patrolling. These will be the focus of further discussions." The first part of the statement is quite an unusual confession. This has already been countered by the Opposition and the Government still have to record a convincing reply about the cost that India has to pay to reach this partial disengagement decisions. Media report ( February 14, The Hindu) shows that the former Defence Minister has recently made public that withdrawal from the petrol point 14 in the Galwan valley to Finger 3 in Pongong Tso Lake and agreeing to create a buffer Zone in Indian territory amounts to surrender – which means surrendering of areas traditionally controlled by India. He also asked Government what made it the Government to agree to withdraw from the strategically important Kailsh ranges on the southern bank of Pongong Tso lake? The former Defence Minister has also criticized the Government for not giving priority budget to the Defence sector.

Let us now briefly have a look at the defence budget for FY 22. The total budget allocation for defence for the FY 22 is Rs 4.78 lakh crore as against Rs 4.84 lakh crore allocated for the current year (FY 21, Revised). Government is comparing the total allocation made for FY22 to the allocation made in the year FY 20. This is meaningless, especially when the Budget provision for the Ministry concerned for the current year has already been revised. Thus there is a reduction of about 1.37 per cent in the defence budget for 2021-22. As much as 44.35 per cent of the total allocation is kept for establishment expenditure amounting to Rs 2.12 lakh crore. This is against Rs 2.09 lakh crore earmarked for the current year. In defence budget, only capital outlay plays the significant role as it involves strengthening the defence logistics. The total amount budgeted capital outlay for FY 22 is Rs 1.35 lakh crore as against almost the same amount of 2020-21. Thus, there was basically no change in the amount earmarked for capital expenditure in FY 22. However, the breakup of the capital expenditure shows a large-scale variation of amounts in respect of major items. For example amount earmarked for construction in Army sector is Rs 5,572 crore as against Rs 6,887 crore in 2020-21 and Rs 5,642 crore in 2019-20. Similarly, for purchase of aircrafts etc the amount allocated for FY 22 is Rs 4,223 crore as against Rs 3,809 crore of the current year. It may be noted that the armed forces procured large-scale ammunition and weapons from several countries in the current year spending an amount of Rs 20,776 crore over and above the budgetary provision in the face of the Ladakh border standoff with China. Keeping this in mind perhaps the amount for purchase of army equipment has been enhanced from Rs 20,650 crore in the current year to Rs 23,490 crore in the FY 22 i.e. an increase of about 14 per cent . Similar increment in allocation for the same purpose has been made in case of Air Force but there has been a decrease in the amount in case of Navy. This indicates that the source of threat is perceived from the nations having no sea boundaries with India. There has also been a decrease in the total allocation for Navy from Rs 37,543 crore to Rs 33,254 crore, a decrease of about 11.4 per cent. Another notable increase in allocation can be observed in case of Research and development where an amount of Rs 11,376 crore has been budgeted for FY 22 as against Rs 7,958 crore (revised) in the current year. Initial allocation for R & D in the current year was also Rs 10,533 crore but due to pandemic the amount has been revised downward.

It may be noted that the defence budget allocation has been gradually decreasing as a proportion to GDP ( real) since last six years. The Parliamentary Standing Committee on Defence (2018) in their 40th Report had recommended that the Ministry of Defence should be allocated a fixed budget of about 3% of GDP to ensure adequate preparedness of the armed forces. Apart from the suggestion of revamping the age-old procurement system there has also been discussions on reforming the functional parameters of the Ministry itself.

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