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Budget cap won’t hit pensions: MoD

Budget cap won’t hit pensions: MoD

Ajay Banerjee

Tribune News Service

New Delhi, April 10

Spending, Cash Flow Management

  • The Finance Ministry, on April 8, came out with an order that listed out the spending and cash flow management of each ministry
  • In case of the Ministry of Defence, the order says only 20% of the allocated budget for 2020-21 can be spent in the first quarter

With the Union Ministry of Finance capping the spending of the budget for the first three months of this fiscal, the Ministry of Defence has taken up the matter of keeping ‘defence pensions’ out of the ambit.

In view of the ongoing financial crisis to the economy caused by Covid-19, the Finance Ministry, on April 8, had come out with a detailed five-page order which lists out the spending and cash flow management of each ministry.

In case of the Ministry of Defence, the order says only 20 per cent of the allocated budget for 2020-21 can be spent in the first quarter – April to June.

This cap of 20 per cent applies to defence capital, defence services and defence pensions. MoD spokesperson Bharat Bhushan Babu, on being pointed at how the defence pensions could be capped, said: “The ministry is in touch with the Finance Ministry. No problem with regards to payment of pensions is envisaged at this stage”. Officials point out that the pensions will have to be paid as per actuals. This cap on spending only 20 per cent in the first quarter cannot work. A sum of Rs 1,33,819 crore has been earmarked for pensions.

But in case of the cap of defence services --- that is used for salaries, day-to-day fuel, training expenses, this cap can be managed as all training and travel has been put on hold due to the Covid.

The cap in case of the capital spend will be insignificant as matters are expected to be ironed out once the lockdown lifts. This year a sum of Rs 1,13,626 crore has been set aside for capital allocation used for purchase of new aircraft, weapons warships, military hardware like UAV’s and guns.

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