Page 582 - SSB Interview: The Complete Guide, Second Edition

when a war had broken out between India and China in October. India is
a growing superpower which is surrounded by arch-rivals Pakistan in

the west and China in the north. In addition to this, India has to fight

terrorism and insurgency, so the defence budget must fulfil all the needs
of our defence forces.

The lion’s share of the budget is always taken up by revenue
expenditure and the balance is left for capital acquisition. With the

implementation of the Seventh Central Pay Commission (CPC) and One

Rank One Pay (OROP), revenue expenditure in the past couple of years
has gone up, leaving little for capital expenditure. That means that only

3.6% of the defence budget is available for the modernisation of all three

armed forces for an entire year.

While India’s defence budget is now the fourth-largest in the world, it
needs to address the issue of under-utilisation of the capital budget. As

per the estimates, approximately `7,000 crore worth of the capital
budget is being underutilised. Hence, India’s defence budget suffers not

only from misallocation but also underutilisation.

Reforms in Defence Budget

The Indian Armed Forces (especially the Indian Army) is too

person-heavy and needs some force rationalisation. Even China

decided to reduce its troop size by 3,00,000 people in 2015.

Apart from this, the defence ministry needs to urgently follow the
railway ministry in adopting accrual accounting.

It is evident that the true pension liabilities of the Indian Armed

Forces are unknown.

Therefore, the armed forces need a good calculation of their assets

and liabilities to be prepared for future conflict.

The Budget 2018-19 informs us of defence production corridors

being created. They will definitely help in indigenisation of defence