India’s new defense budget falls way short for modernization plans

By: Vivek Raghuvanshi

NEW DELHI – India's defense budget for 2019 included a marginal 6.87 percent bump to $49.68 billion, which is unlikely to meet modernization demands or ‘Make in India' manufacturing increases.

Out of the total allocation, $16.91 billion has been set aside to buy new weapons and other military hardware, compared to $14.68 billion in the previous financial year. But not accounted for are the liabilities, say some defense analysts, which could chip away at available funds.

“As of now, one doesn't know about the extent of committed liabilities to be able to say how much money will be available for new purchases,” said Amit Cowshish, former financial advisor for the Ministry of Defence acquisition. "But it can be said with reasonable certainty that the allocation must be much less than the requirement projected by the ministry. That being the case, the ministry will have to make do with whatever money they have got, just the way they have been managing in the past.”

India's defence budget is more than five times that of Pakistan, pegged at $9.6 billion — barely enough to maintain its basic operational capability.

Presenting the interim budget for 2019-20 in parliament, Union Minister for Finance and Corporate Affairs Piyush Goyal said additional funds, if necessary, would be provided to secure India's borders and maintain its defense preparedness.

Under capital outlay, the Army was granted $4.60 billion and the Navy granted $3.61 billion — both nearly flat compared to the year before. The Indian Air Force was allocated $6.14 billion, combared to $5.58 billion in the previous year.

One MoD official said the majority of funds will go towards past committed liabilities for Rafale fighters, S-400 missile systems, warships and helicopters. Still, the fact that the budget saw an increase is noteworthy to some.

“The allocation for defense, which for the first time has crossed the $49 billion threshold is encouraging," said Baba Kalyani, chairman of leading private sector defense enterprise Bharat Forge Ltd. In terms of manufacturing, "we hope that ‘Make in India' will result in a greater role for the private industry in this critical sector of the country's economy.”

Cowshish is less encouraged, seeing very few noteworthy programs on the horizon.

“It doesn't seem likely that many big contracts for fighters, helicopters, submarines, etc. will get concluded in the coming year," he said. "This is not because of paucity of funds but on account of the fact that none of these procurement proposals are likely to reach anywhere near the contract conclusion stage any time soon. “

https://www.defensenews.com/global/asia-pacific/2019/02/05/indias-new-defense-budget-falls-way-short-for-modernization-plans/