What the new budget means to the India’s defence sector

Arun Jaitley announced the new budget for the year 2017 on Wednesday. People could not care less honestly. But here in DBV, we shall focus on the budget affected the defence of our country.

With an expenditure of 50.6 billion dollars in the precious year, India now is among the top 5 countries who spend on defence. India is Asia’s third largest economy and it has the fourth largest defence budget followed by Saudi Arabia and Russia. This is according to 2016’s Jane Budget Budget report.

However, after the budget of 2017 was released some bad news followed. A very less 6% hike in the allocation shows that defence spending remains a low priority area for the government of India, and this should never be the case.

The hike is highly unlikely to meet the impact of inflation or demonetisation, the value of the rupee going down and the imposition of customs duty on military imports from year of 2016.

Pinned at a hike of 1.62% of the GDP this year, the allocation is very unlikely to cater for major weapons and arms purchases. So this means that the government is ready to compromise on the defence system of the country? This is despite the fact of recommendation of a vital defence ministry panel that the spending should be at least 2.5% of the total GDP.

“The fact that all defence imports now attract customs duty and the rupee has depreciated against the dollar, it will be interesting to see how the large pending procurements go ahead,” said Ankur Gupta, vice-president, aerospace & defence at EY India.



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