The Union Finance Minister P. Chidambaram has announced that the defence budget for 2014-15 had been hiked from Rs. 2,03,672 crore to Rs. 2,24,000 crore, a 10 per cent increase over last fiscal’s outlay. The capital outlay has been increased from Rs. 86,740 crore to Rs. 89,587 crore in the interim budget for 2014-15, a hike of barely 3.2 per cent.

The meagre increase in capital expenditure, experts state, could hit the modernisation plans of the armed forces. In the last fiscal, over Rs. 7,200 crore had to be diverted to revenue expenditure which resulted in delays in equipment acquisitions.

The low hike in capital expenditure could derail some key modernisation plans, at a time when the military is planning to scale up its capabilities with new fighter planes, submarines, artillery guns and land-based strike formations. China’s official, but underreported, defence budget for 2013-14 stands at Rs. 5,94,000 crore.

India is years behind the Chinese military with the neighbour currently outnumbering the country’s combat power by a 3:1 ratio. India’s hopes to bridge the gap in the next 15 years hinge on availability of funds.

One rank, one pension

The Central Government also announced that it has accepted the ‘one rank, one pension’ policy, for which “Rs. 500 crore will be transferred in 2014-15 for implementing the one rank one pension decision.”

Under the ‘one rank, one pension’ rule, retired soldiers of the same rank and length of service will receive the same pension, regardless of when they retire. Currently, pensioners who retired before 2006 receive less pension than their counterparts, even their juniors.