Defence Budgeting: Trends and Issues

The defence budget for the financial year 2009-2010, even though in terms of percentage increase appears large, yet it is not actually so. There has generally been a mismatch between the funds asked by the MOD and those allotted by the MOF. The absence of indication of likely availability of funds impacts adversely the defence planning process. Of late, there has been improvement in the ratio of revenue to capital expenditure, but for a healthy ratio there is a need to increase the defence budget as a percentage of the GDP. While the capital budget allotment to the Navy and Air Force has seen a shift towards the positive, there is also a need to allot additional budget to the DRDO for R&D. Indigenisation efforts also need a boost. There is also a need to enhance coordination between the MOF and MOD for force modernization to meet the challenges from potential adversaries.