Union Budget 2021: Developments around LAC, LOC warrant hike in allocation in defence outlay

By Firstpost

Year 2020 saw a remarkable beginning with the 11th edition of Defence Expo at Lucknow from 5-8 February 2020. Over 200 partnerships involving the signing of memorandum of understandings (MoUs), transfer of technology and product launches took place on the third day of DefExpo-2020 at a ceremony called Bandhan.

Among those MoUs signed, 23 of them were by Uttar Pradesh government. The Bandhan ceremony witnessed more than 13 product launches, 124 MoUs between DPSUs, private and global defence manufacturing companies.

Given India’s geopolitical situation, the expectations from the Defence Budget for FY 2020-21 were quite high. However, it was a routine allocation of Rs 3,37,553 crore (excluding Defence Pension). Out of Rs 3,37,553 crore, Rs 2,18,998 crore is for the Revenue (Net) expenditure and Rs 1,18,555 crore is for capital expenditure for the Defence Services and the organisations/departments under the Ministry of Defence.

With the outbreak of the pandemic, several countries went under national lockdown. India, too, was under a nationwide lockdown from 24 March till 14 April 2020. Though lockdown restrictions continued to ease with each phase, it impacted the economy adversely. As a result, the Ministry of Finance on 8 April 2020 released an order listing spending and cash flow management of each ministry.

For the Ministry of Defence (MoD), the order put a cap of 20 percent to defence capital, defence services and defence pensions. Such measures further solidified the understanding that in a post-COVID world, self-reliance will be a necessity. Hence, on 12 May 2020, the Government of India (GoI) gave a clarion call of Atmanirbhar Bharat or self-reliant India.

As part of the Atmanirbhar Bharat Rozgar Yojna, the GoI announced several reforms in eight sectors as part of the stimulus package.

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