Tuesday 27 September 2016 Home | Sitemap | Contact Us

  Research Papers  |  Books  |  Items
Security Issues South Asia » Military Contracts » India’s Defence Budget 2012-13: A Holistic Analysis
Rahul Bhonsle

Mar 28, 2012

Print Bookmark Email

India’s Defence Budget 2012-13: A Holistic Analysis

General. India’s economic growth story suffered a set back of sorts in 2011 with the cumulative growth of GDP for 2011-12 anticipated to fall below 7 percent. This had led to some skepticism of the ability to sustain a high defence budget in the coming year 2012-13.  Thus when the Finance Minister, Mr Pranab Mukherjee announced India’s Defence Budget 2012-13 Estimates at Rs 193407.29 Crore/Rs 1.93 trillion or  US $ 38.7 Billion[1], it came as a surprise and relief to many. Defence Minister Mr A K Antony even went to the extent of calling it the best budget under the current circumstances.

First the details of the Defence Budget 2012-13, the revenue and capital component of are Rs 1, 13,829 Crore and Rs 79,578 Crore respectively. The breakdown is Army (Rs 78114.36 Crore), Navy (Rs 12548.02 Crore), Air Force (Rs 17705.81 Crore), Ordnance Factories (Rs (-) 535.09 Crore), Research and Development (Rs 5995.56 Crore) and Capital outlay on all the three services as well as R & D and Ordnance Factories (Rs 79578.63 Crore).

Annual Comparison. The Rs.1,93,407 Crore $38.6 billion/Rs.1.93 trillion Budget for 2012-13 is a 13 percent increase  of Rs.22,470 Crore ($4.5 billion) over revised estimates of Rs.1,70,937 Crore for the fiscal 2011 – 12 ending March 31 2012 and  17.6 percent over the Rs.1,64,415 Crore ($32.8 billion) budget estimates announced in February last year. Thus there is an increase of Rs.6, 522 Crore (over $1 billion) in the revised estimates. The 13 percent raise is marginally higher than the 11.59 percent hike in the budget for 2011-12.

The increase in the past two years comes about after defence budget rose by a mere 3.98 percent in 2010-11. In terms of Percentage of GDP, the Defence Budget for the past two years has remained well below the 2 percent limit that the government seems to have set for itself. Defence Expenditure is also set to be below 13 percent of the overall central government expenditure which is also in keeping with the existing trends. The ratio of revenue to capital expenditure has also remained constant at approximately 60:40 even though the Ministry of Defence has been claiming that it is making efforts to achieve a 50:50 ideal ratio this will apparently take some more years to fructify. The annual comparison of defence budgets from 2009-10 is as per Table follows.

Item 2009-10 2010-11 2011-12 (BE) 2011 – 12 (RE) 2012-13 (BE)
Defence Budget $  Bn (Rs. in Crore)* 31.93 (1,41,703) 33.20 (1,47,344) 37.05 (1,64,415.49) 37.99 (1,70,937) 38.68 (1,93,407)
Growth of Defence Budget (%) 34.19 3.98 11.59 - 13.1 ex RE 2011 – 12 & 17.1 ex BE 2011 - 12
Revenue Expenditure  $ Bn (Rs in Crore) 19.31 (86,879) 19.41 (87,344) 21.16 (95,216.68) 21.81 (109039.8) 22.77 (113829)
Growth of Revenue Expenditure (%) 50.85 0.57 9.01 - 4.39
Revenue Expenditure in Defence Budget (%) 61.3 59.28 57.91 - 59
Capital Expenditure  $  Bn (Rs. in Crore) 12.18 (54,824) 13.33 (60,000) 15.38 (69,198.81) 13.23 (66143.81) 15.92 (79578.63)
Growth of Capital Expenditure (%) 14.20 9.44 15.33 - 20.31
Share of Capital Expenditure in Defence Budget (%) 38.7 40.7 42.09 - 41
Share of Defence Budget in GDP (%) 2.30 2.12 1.83 1.80 1.9
Share of Defence Budget in Central Government Expenditure (%) 13.88 13.29 13.07  [Total expenditure budget of GOI  US Dollars Billion 279.50 (Rs.12,57,729 Crore)  for 2011-2012] 12.96 12.97

[Note comparison in terms of percentage and ration is based on Rupees Crore Values]

GDP Percentage. The defence outlay constitutes 1.90% of GDP (estimated to be Rs101, 59,884cr). This is a marginal increase from the 1.83 percent of the GDP in 2011-12 and follows the general trend.

Percentage of Government Expenditure. Total government expenditure budgeted for 2012-13 is Rs 1490925 Crore. This is an increase over Rs 1318720 Crore budgeted for 2011-12 by Rs 172205 Crore. The Defence Expenditure for 2011-12 (Revised) and 2012-13 is Rs 170937 Crore and Rs 193407 Crore respectively.  This is only a marginal increase from 12.96 percent of the total government expenditure in 2011-12 to 12.97 percent in total government expenditure in 2012-13.

Assessment of Budget – Functional Fulfillment

A defence budget is required to perform three main functions, statement of expenditure of the past year and envisaged estimates for planning for the ensuing year, outline the main areas of capacity building achieved and finally provide the trajectory for capacity building through resourcing. An evaluation of the Budget based on these three parameters is carried out as follows:-

Statement of Expenditure. As a statement of expenditure the Defence Budget denotes that in 2011-12, the Revenue Budget of the services has been skewed with excess expenditure by the Army and the Navy. At the same time capital expenditure has not been as per expectations denoting that there have been a number of shortfalls in acquisitions by all the three services. The Ordnance Factory and DRDO expenditure state is also not satisfactory; the net receipts of the Ordnance Factories in particular are poor as compared to the capacity that is created for this purpose with over 40 establishments. Thus the overall management of budget by the services leaves much to be desired, however there has been not correctives denoted either as incentives or penalties in this direction. There is also no attempt to balance the ratio of revenue and capital towards an ideal 50:50 for 2011-12. The statement by the Finance Minister that additional funds will be provided for as and when required may in fact have negative connotations with services taking this as a licence for continued profligacy.

Related Tags


Related Article

India Defence Policy Issues
India’s Defence Budget 2014-15 – Expect a 15 - 20 percent Hike
India’s Final Defence Budget 2014-15: Continuing Challenges to Modernisation
India’s Defence Budget 2012-13: A Holistic Analysis
Transformation of the Indian Air Force: Challenges and Opportunities
Defence Budget 2011–12 – Misplaced Euphoria
India: The Makings of a Regional Power
India’s Defence Budget 2014-15: New Acquisitions Challenged
PLA Modernisation
Reforming Ammunition Management in the Indian Army: The Pulgaon Trigger
Naval Strategic Review: Biannual Conference
Economic Slow Down: India's Defence Modernisation First Casualty
India Slash In Defence Budget 2012-13?
Shri AK Antony as Defence Minister -A Look Back
Defence Budget 2016-17 – Caught in the Low Capital, High Revenue Trap
Indian Military Capacity Building
Combat Enhacement of Armed Forces: Shekatkar Committee Appointed
India Strategic Missile Sword and BMD Shield
First defence firm to get nod for higher FDI Aerospace
Deficiencies in Ammunition Management - CAG Report 2015
Bangladesh Defence & Security Budget 2016-17 A 75 Percent Hike
India `s Defence Capability Building : Cooperation and Acquisitions


Article by Same Author

India Japan Annual Summit: Defining a New Strategic Axis
Cease Fire Violations: Spare the Civil Population and Assets
Vikramaditya: A Symbol of India Russia Defence Relations
Are India’s Security Forces Prepared for 2014?
Modi Defence and Security Policies – Exploiting the “Triple Whammy”
Navy Chief’s Resignation: A Survey Of The Big Picture
BRICS: Towards Political and Security Muscle?
NSA Talks: Effect of Civil Military Relations in Pakistan
Nuclear Suppliers Group Need for Enlightened Consensus on India
Tweaking the “Tweet Policy,” for the Indian Armed Forces
Ex Sudarshan Shakti – Integrated Theatre, Network Centricity
Smart Strategies For Defence Indigenisation
Perils of Measuring Instability or Peace Uniformly
South Asia Political Security Challenges
Pakistan: The Soft Coup to Constrain Nawaz Sharif
What to Expect of Defence Budget 2014- 15?
Reasons Why World’s 15 Top Military Spenders Splurge?
Bangladesh – Arming Without Aiming?
Ease of Doing Defence Business in India
Mazagon Dock Pipavav: First Defence Joint Venture
Kashmir: Hot Days in Run Up to UN General Assembly Session
US Confirms Pole Position in India’s Bilateral Relations
Next Steps to Indian Membership of Nuclear Suppliers Group (NSG)
Daw Aung Suu Kyi: The Liberal Pragmatic
Can India Do Without BAE Light Howitzers?
Inter Community Relations in South Asia
Pakistan: Sharif versus Sharif Round Two
Pakistan Prime Minister’s Ajmer Visit – A Review
Indian Elections: The Security Paradigm
New Army Chief’s LOC Comments: Onus On Front Line Troops
Qualitative Differences In India Russia, Indo US Relations And India China Relations
Indian Navy - Beyond Platform Centrism
Maldives: Early Elections May Diffuse Crisis
Exercise Sarvada Vijay & Azm E Nau A Brief Comparison
Boeing’s First India Defence Contract Challenge
Pak Army Chief: Sharif Makes Safe Choice
Pakistan : Winds of Political Change?
PM Modi visit to Vikramaditya: Signaling Hard Power
US QDR 2014 - Tracing Shifts in India US Defence Relations
Indian Army: One Plains Strike Corps Too Many
India China and Lure of the Himalayas
Indigenisation of Capital Acquisitions
Kashmir: Political Engagement and Counter-Narrative - The Way Ahead
Is Indian Political Influence Bringing Stability in South Asia?
Could Plan B for Rafale be Su 30 MKI?
Nawaz Sharif’s “K” Dilemma, Choosing Kayani’s Replacement
India in Maldives: Big Brother Must Deliver
India – China – Next Steps to Boundary Management
Indo US Defence Cooperation: Impetus in Strategic Dialogue
Herat Indian Consulate Attack: Joining the Dots

Y! MyWeb

Home | Security Trends South Asia | Security Issues South Asia | Top Stories | Publication  | Events | About Us | Contact Us | Disclaimer  | Privacy Policy
© Copyright of Security-risks 2016 All Rights Reserved Web Design India Internet
In case you come across any suspicious activity, any suspicious movement or have any information to tell to the Anti-Terror Squad, please take a note of the new ALL INDIA TOLL-FREE Terror Help-line "1090". Your city's Police or Anti-Terror squad will take action as quickly as possible. Remember that this single number 1090 is valid all over India. This is a toll free number and can be dialled from mobile phones also. Moreover, the identity of the caller will be kept a secret.

Please try to make aware each and every citizen of India about this facility.

BC is the westernmost of Canada's provinces and is famed for its natural beauty.Vancouver is BC's largest city.