Budget 2021: Will Centre hike defence Budget to meet 'urgent requirements of Armed Forces?

New Delhi, Jan 27: With an aim to counter China's aggression, the central government might hike the defence Budget for the financial year 2021-22 to meet the "urgent requirement of the Armed Forces".

 

 

Apart from the India-China border standoff, the media reports suggest that the Centre is planning to modernise the Armed Forces under the vision of 'Atmanirbhar Bharat' that might force it to hike the defence Budget. The Centre will likely focus on indigenous procurement and research and development (RD) of arms and ammunition for the defence sector in the upcoming budget.

 

The Ministry of Defence has also requested the Finance Ministry to provide extra funds to set-up non-lapsable fund. This request will likely be fulfilled in Union Budget 2021.

 

There are several modernization projects that require immediate implementation because of the conditions on the LAC and LoC. These include helicopters, fighter aircraft, drones, artillery guns amongst others.

 

Last year, the central government had also hiked the defence Budget by six per cent to meet the requirements of the Armed Force. Later, it announced an embargo on the import of 101 defence items and raised the foreign direct investment (FDI) limit in the defence sector to 74 per cent under the automatic route.

 

In its order, the Centre had said that FDI up to 74 per cent under automatic route shall be permitted for companies seeking new industrial licences while adding that it "will enhance Ease of Doing Business and contribute to the growth of investment, income and employment".