India’s Defence Budget 2021: Key Questions the Parliamentary Panel Must Not Ignore

India’s defence budget 2021 hides more than it reveals. As tensions with China persist, a Parliamentary Committee reviews defence cuts, pension dec..

Photograph Of Parachute Special Forces, During Republic Day March Past.

Lead: Budget Mysteries Cloud India's National Security Strategy

As the Parliamentary Standing Committee on Defence prepares to scrutinize the Ministry of Defence’s budget allocations this week, serious gaps in transparency and logic within the Union Budget 2021 have triggered national security concerns. Despite China’s aggressive posturing on the border and a strained economy, defence spending has not kept pace with strategic necessities — raising urgent questions about India’s military preparedness, pension funding, and long-term modernisation plans.

Defence Spending Shrinks Amid Rising Security Threats

In a puzzling move, the total defence expenditure for FY2021-22 has been slashed by 1.35% compared to the revised estimates of FY2020-21. This reduction comes in a year marked by Chinese military tensions in eastern Ladakh and a broader recalibration of regional power dynamics.

While the economy did contract due to the pandemic, the cut in defence spending, which remains stagnant at 2.15% of GDP, reflects a strategic contradiction. Analysts believe the Committee must press the Ministry of Defence (MoD) to explain whether alternative funding mechanisms have been explored to maintain robust military readiness.

Modernisation Funds: Committed or Compromised?

Is the capital boost a sign of actual progress or a payment backlog?

A key component of India's defence posture—modernisation—remains underfunded despite a Rs 20,000 crore capital outlay increase during the pandemic. Although this was touted as an emergency procurement initiative, budget documents suggest the funds were mostly allocated to meet past commitments, especially in naval and air force equipment.

With capital earmarks often blending both old and new projects, the lack of budgetary clarity obscures India’s actual readiness for future warfare. The Committee should demand detailed disclosures on how much funding supports new acquisitions versus previous contracts—particularly in the face of emerging technologies like drones and AI-based systems.

Defence Pensions: Unexplained Drop Raises Alarms

One of the most glaring anomalies in the FY2021-22 Budget is a nearly 13% drop in defence pension expenditure, amounting to a Rs 18,000 crore decline from earlier estimates. This is particularly baffling since pensions are generally predictable, especially after the implementation of the One Rank One Pension (OROP) scheme, which historically raised outgo by 17% annually.

Speculation abounds—ranging from a freeze in dearness allowance to a potential hike in retirement age—yet none fully justify the steep decline. Most pensioners are below officer ranks, and their numbers are unlikely to have dipped so dramatically in a single year.

The Committee must urgently seek a transparent explanation from the MoD and ensure that short-term fiscal management does not jeopardize long-standing statutory commitments to veterans.

Revenue Generation: Can MoD Fund Its Own Future?

With increasing defence needs and limited budgetary space, the MoD’s ability to generate its own revenue is under fresh scrutiny. The 15th Finance Commission has recommended the creation of a non-lapsable defence fund, with sources including disinvestment of Defence Public Sector Enterprises (DPSEs), monetisation of defence land, and land transfers to state projects.

However, progress has been slow. The Committee should actively push for a concrete timeline and prioritised list of DPSEs targeted for disinvestment. Urgency in monetising defence assets could significantly contribute to funding modernisation without burdening taxpayers.

Lack of Transparency: A Broader Accountability Crisis

For the second consecutive year, the Finance Minister’s Budget speech made no mention of defence, indicating a troubling sidelining of national security in public financial discourse. The opaqueness in budget documentation, particularly the lack of differentiation between new schemes and legacy liabilities, undercuts both public trust and strategic confidence.

The role of the Parliamentary Standing Committee on Defence is now more crucial than ever. Their interrogation could redefine the strength of legislative oversight over defence expenditure—a key aspect of democracy in national security governance.

Conclusion: National Security Cannot Afford Budgetary Ambiguity

As global geopolitical tensions mount and non-traditional threats multiply, India's defence apparatus cannot remain shackled by fiscal fog and planning opacity. This week's deliberations by the Parliamentary Committee must go beyond routine oversight and demand structural reform, transparency, and long-term strategic alignment. The credibility of India’s defence budgeting—and by extension, its military preparedness—rests on their inquiry.

(Based on Original Input: Lt General Prakash Menon and Pranay Kotasthane report.)
Edited from Agra, Uttar Pradesh — By The Indian Hawk TEAM