NEW DELHI: There will no big bang modernisation for the over 15-lakh strong armed forces. The defence outlay is pegged at Rs 3.18 lakh crore, much like the interim budget presented in February, which marks just a 6.87 per cent hike over the last fiscal's revised estimates to just about cater for inflation. 

Grappling with a ballooning salary and pension bill, the country's military modernisation will continue in its slow, incremental manner as before. The Rs 3.18 lakh crore defence budget works out to just 1.5 per cent of the projected GDP for 2019-2020, which is the lowest such figure since the 1962 war with China. Another Rs 1.12 lakh crore has been allocated separately for defence pensions of military and civilian personnel. 

The armed forces and strategic experts have for long been demanding that defence should get at least 2.5 per cent of the GDP for requisite deterrence against China and Pakistan. Finance minister Nirmala Sitharaman, however, did say, "Defence has an immediate requirement of modernisation and upgradation. This is a national priority. For this purpose, import of defence equipment that are not being manufactured in India are being exempted from the basic customs duty." 

But of the Rs 3.18 lakh crore figure, the capital outlay is just Rs 1,08,249 crore for new weapon systems and overall defence modernisation. It continues to be dwarfed by the Rs 2,10,682 crore revenue expenditure for day-to-day running costs, salaries and the like. Moreover, the bulk of the capital outlay will go for "committed liabilities" or instalments for arms deals inked in earlier years, with not much being left for new projects. 

"The capital allocation for MoD is already almost 32 per cent of the total central government capital expenditure, which is Rs 3.38 lakh crore," said an official. Though the armed forces desperately need more money to address their critical operational shortages in fields like fighters, helicopters, submarines, minesweepers, missiles and night-fighting capabilities, there is simply not enough in the face of competing demands from other sectors like infrastructure, health, education and the like. 

Consequently, there is no option for the new Modi-2.0 government but to strongly push for long-pending defence reforms, ranging from right-sizing and genuinely integrating the armed forces to cut down non-operational flab to bolstering the fledgling indigenous arms production sector and creating the post of a tri-Service chief.