Defence: Just 50 Per Cent Of Allocated Budget Spent By Armed Forces Amid Western Sanctions On Russia

The Indian Armed forces were able to spend just over 50 per cent of the allocated budget for Capital Expenditure (capex) till 1 February 2023, due to the Russia-Ukraine war and the Covid-19 pandemic, The Indian Express reported.

The capital expenditure or Capex is the budget allotted for buying new equipment like fighter jets, warships, submarines and tanks.

The Indian Express reports that the Army was able to spend only Rs 23,000 crore, which is about 72 per cent of the allocated budget, while the Navy spent Rs 27,500 crore, which is about 56 per cent of its budget.

However, the Air Force was a particular laggard in spending, with only Rs 30,000 crores or 52 per cent of the allocated budget spent till 1 February.

This cumulatively amounts to Rs 80,500 crore, which is just about 52 per cent of the allocated defence budget of Rs 1,52,000 crore for the year 2022-23.

The report, quoting a top government official, states that the primary reason behind low spending was India’s inability to process payments to Russia, due to sanctions and delays in delivery of the orders on account of the Covid-19 pandemic.

“Also, there weren’t many new contracts that materialised and thus the absorption capacity for additional funds was low,” the official added.

The low spending last year can be a reason for the modest rise in the budget this year (FY 2023-24) of only Rs 1,62,000 crore for capex, which is up a mere 6.7 hike from last year.

The forces have only two months to spend the remaining allocated budget for last year, or else the budget will be surrendered back to the Finance Ministry. 

The Ministry of Defence (MoD) is meeting various stakeholders like Defence Public Undertakings (DPSU) and the forces, to expedite the delivery of delayed equipment, new contracts and payments.

It is reported that the Armed forces are asking for the rollover of unutilized funds, to the next fiscal year, instead of them surrendering it back to the Finance Ministry.