A GDP growth of less than seven per cent combined with the fiscal consolidation path that the Finance Minister has articulated in his budget speech means a lot of pressure on the defence ministry whose plan for current and future expenditure up to 2017 is based on past GDP growth rate of 8 to 9 per cent.

There is a need for an overhaul of the defence planning and budgeting systems to make them outcome oriented, which will lead to the development and maintenance of requisite capability through the defence forces as an entity over a specified long-term horizon.

In the larger scheme of things, fiscal prudence is a good trait and the reduction in deficits desirable, yet an overtly ambitious approach of reducing deficits into a number game may lead to developments that may hurt us not only in the security arena but in economic growth as well.

While the anguish over the state of modernization of the armed forces, the slow march towards achieving the capability for simultaneous action on two-fronts and rather feeble power projection on a global scale are understandable, what is not understandable is the expectation that the outlays for achieving these objectives would increase exponentially, irrespective of the state of the economy.

The prospects of allocation for the next year being less than the allocation for the current year are remote because of the immense implications it would entail, although it is likely that the growth in the budgetary allocation for the next fiscal may be less than what has been the case in the past.

It is almost customary to blame underutilization of the capital acquisition budget on defective planning, apathy of the civilian bureaucracy and procedural complexities. This view, however, does not take into account several factors that are external to the Ministry of Defence.

On the capital side, there may not be much of an adverse impact of reduction in allocation if the MMRCA contract gets pushed to the next year. On the revenue side, procurement of ammunition and other equipment as well as maintenance of legacy systems would be adversely affected.

An expansionary fiscal policy has been the prime mover for the large increase in the budget of the defence ministry, which would otherwise have come under severe budgetary pressure.