Defence budget: Rs 4200 crores lapse unspent - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Friday 29 February 2008

Defence budget: Rs 4200 crores lapse unspent

The allocation for India’s defence budget has been raised by exactly 10% this year, from Rs 96,000 crores to Rs 1,05,600 crores. This is a landmark, with the defence budget crossing the one lakh crore rupee mark. In dollar terms, the budget is a healthy US $26.7 billion dollars.

But there’s a dark side. The Demands for Grants in the Annual Budget for 2008-09, presented today in parliament, reveal that the Ministry of Defence (MoD) has once again failed to spend a large part of the Capital Budget, the allocation for purchase of new equipment for the military.

Against last year’s capital outlay of Rs 41,922 crores, the revised estimates presented today are just Rs 37,705. That means that the government has left Rs 4217 crores unspent in 2007-08.

That means that a cumulative amount of Rs 22,517 crores have been left unspent since 2002. The amounts that have lapsed unspent in the five years preceding 2007-08 are:

2002-03 : Rs 9000 crores
2003-04 : Rs 5000 crores
2004-05 : Nil
2005-06 : Rs 1300 crores
2006-07 : Rs 3000 crores

The revenue expenditure, itemised service-wise, for last year and this is:

1. Army:

(a) Allotted in 2007-08 : Rs 35,194.26 crores
(b) Spent in 2007-08     : Rs 35,426.48 crores
(c) Allotted in 2008-09 : Rs 37,678.25 crores

2. Navy:

(a) Allotted in 2007-08 : Rs 7050.11 crores
(b) Spent in 2007-08      : Rs 7174.05 crores
(c) Allotted in 2008-09 : Rs 7503.05 crores

3. Air Force:

(a) Allotted in 2007-08 : Rs 10,430.36 crores
(b) Spent in 2007-08     : Rs 10,728.97 crores
(c) Allotted in 2008-09 : Rs 11,288.86 crores


(a) Allotted in 2007-08 : Rs 3202.47 crores
(b) Spent in 2007-08      : Rs 3226.06 crores
(c) Allotted in 2008-09 : Rs 3413.59 crores

And finally, as an aside, the allocation for pensions this year (which is not a part of the defence budget, i.e. it is over and above the Rs 1,05,600 crores) is marginally up from 15,244 crores in 2007-08 to Rs 15,564 crores in 2008-09.


  1. According to those numbers, all three services spent more than allocated. Who didn't spend as much as allocated?

  2. All overshot their revenue budgets marginally. The revenue budget caters for running expenses --- salaries, consumables, ammunition, fuel, administrative expenses etc.

    What was left unspent was the capital budget. The capital budget is not distributed to services, it is spent centrally. Rs 4217 crores, as my article mentions, was surrendered to the government yesterday, since it lapsed. Those are the financial rules of the govt.

  3. This comment has been removed by a blog administrator.


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