INDO-PACIFIC India’s Defense Budget OE Watch Commentary: As Indian defense officials look to bolster the country’s armed forces in the event of a conflict with both China and Pakistan through modernization efforts, the accompanying excerpted article discusses a potential roadblock. The article reports on the recent announcement that India’s defense budget is not slated to increase as some officials had believed, particularly after the skirmishes with Pakistan earlier this year. The article notes how “Finance Nirmala Sitharaman kept India’s defense budget unchanged from the interim budget at Rs 3.18 lakh crore (around $46.5 billion)” and that the “lack of change in the budget figures means that the actual hike in the defense budget is just 6.87 per cent more than the revised estimate of Rs 2.98 lakh crore (around $45.8 billion) for the financial year 2018-19.”

The article mentions that Sitharaman did remove the “customs duty on defense products,” which had been in place since 2016, but that the armed forces “were hoping for an increased allocation because they are in the midst of a modernization process, with projects related to new submarines, helicopters and fighter aircraft waiting to be kicked off.” It is worth remembering that Sitharaman was the defense minister during Narendra Modi’s Nirmala Sitharaman in New Delhi, 2017. first term as prime minister (Modi was Source: U.S. Air Force Staff Sgt. Jette Carr via Wikimedia, https://commons.wikimedia.org/wiki/File:Nirmala_Sitharaman_in_New_Delhi_-_2017_(36624276764)_(cropped).jpg, CC BY 2.0 reelected in late May for a second term) and only recently became the . The article does not mention specific projects which will have to wait, but it appears that despite the recent clashes with Pakistan and the well-publicized modernization efforts, the Indian Armed Forces will not be receiving a budget that matches expectations. End OE Watch Commentary (Stein)

“The allocation... is barely enough to cover inflation costs.”

Source: Snehesh Alex Philip, “Even after Balakot air strikes, defence budget remains unchanged at Rs 3.18 lakh crore,” The Print, 5 July 2019. https://theprint.in/defence/even-after-balakot-air-strikes-defence-budget-remains-unchanged-at-rs-3-18-lakh-crore/259138/

After the Balakot air strikes and the subsequent air battle between India and Pakistan on 26-27 February, India’s three services were expecting an increase in the budgetary allocation for defence. But they were left disappointed as Finance Minister Nirmala Sitharaman kept India’s defence budget unchanged from the interim budget at Rs 3.18 lakh crore. The lack of change in the budget figures means that the actual hike in the defence budget is just 6.87 per cent more than the revised estimate of Rs 2.98 lakh crore for the financial year 2018-19. The allocation, however, is barely enough to cover inflation costs. …The only relief for the armed forces is that Sitharaman, who served as defence minister in the first Narendra Modi government, has removed the customs duty on defence products, which means that the services will not have to pay anything as import duty as done since 2016… However, the services were hoping for an increased allocation because they are in the midst of a modernisation process, with projects related to new submarines, helicopters and fighter aircraft waiting to be kicked off…

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