Article Posted on : - Jan 15, 2015

NEW DELHI (PTI): Indian government has ordered a cut of about Rs 13,000 crore in the capital outlay for the Army, Navy and the Air Force in the current fiscal to meet the defence force's revenue expenditure.

While the capital outlay deals with the modernisation programmes of the forces, revenue expenditure covers the expenses incurred for paying salary, pension and fuel bill.

Even as analysts warned that the cut would affect the modernisation plan, Defence Ministry sources say otherwise.

"There is no impact on any modernisation process with this. Moreover, it is only for period up to the next budget and was done last year too," Defence Ministry sources said.

They said the army's share of the cut would be about Rs 4,500 crore while the rest would be taken from the share of the other two forces.

This is the second time in as many years that the Ministry of Defence has done this.

Last year in January, Rs 7,870 crore was moved from the capital account to its revenue account to take care of the forces' additional requirements.

The capital outlay in the maiden budget of the Modi government was Rs 94,587 crore in the total defence allocation of Rs 2,29,000 crore.

However, about 80 per cent of the capital outlays go into committed liabilities - contracts already executed for purchases.