Agnipath recruitment scheme: Why it can help cut the rising salary, pension bill

The government has either allocated or paid more than Rs. 3.3 lakh crore in defence pension since 2020. For years, because of the pension bill, the revenue component of the Ministry of Defence has been larger than the capital outlay for modernisation of the armed forces. In the Budget presented in February, the total defence budget at Rs. 5.25 lakh crore was almost 10 per cent more than last year’s allocation of Rs 4.78 lakh crore. Yet the revenue component of the budget continues to be more than capital outlay.

The total revenue component allocated this year is Rs 3.65 lakh crore, of which pension accounts for Rs 119,696 crore. The nearly Rs 1.20 lakh crore allocated for pension was larger than the Rs 1.17 lakh crore in revised estimates for pension in 2021-22. The previous year — 2020-21 — the actual pension Bill was even higher — Rs 1.28 lakh crore.

In this year’s Budget, defence pension accounts for just under a quarter of the total defence budget, similar to many recent years.

Similarly, salary paid to the forces has also been increasing over the years. The Army paid more than Rs 88,800 crore in salaries (actual) in pay and allowances in 2020-2021, which went up by Rs 10,000 crore last year. The revised estimates for Army’s pay and allowances for 2021-2022 was more than Rs 99,800 crore.

This year, the government has allocated Rs 1.07 lakh crore in Army’s pay and allowances. The Army is the largest among the three forces with a strength of over 11 lakh officers and soldiers.

For Navy, pay and allowances went up from Rs 6,659 crore in 2020-21 (actual) to Rs. 7,832 crore in 2021-22 (revised) to Rs 9,133 crore (budgeted) this year.

Similarly, numbers for IAF have also been going up. From spending Rs 15,984 crore in 2020-21 (actuals) in pay and allowances, it went up to Rs 16347 crore in 2021-22 (revised), and it has allocated Rs 18,346 crore in this year’s Budget.

The total pay and allowances for the three services for this year comes close to Rs 1.35 lakh crore. Added to the Rs 1.2 lakh crore of pension, the government has allocated Rs 2.55 lakh crore for just salary and pension this year, which is higher than the Rs 2.33 lakh crore allocated for capital outlay, to be used for modernisation of the defence forces.

To get an idea of how these numbers have swelled, consider the 2012-13 Budget. Ten years ago, the government had allocated Rs 39,000 crore for defence pension, Rs 56,000 crore for pay and allowances of the services, and nearly Rs 80,000 crore for capital outlay. The total defence budget for the year was Rs 2.38 lakh crore.

An initial proposal by Army in 2020 had even done a rough calculation of how much money can be saved through such a scheme. The initial proposal had considered a three-year model. The calculations carried in the proposal mentioned that “the comparison of cost incurred by the Government for a Sepoy with 17 years Terms of Engagement as compared to (Tour of Duty) Sepoy with 3 years service, shows that the prospective lifetime savings for just one Sepoy is Rs 11.5 (crore). Thus savings for only 1000 jawans could be Rs 11,000 cr which could then be utilised for the much needed modernisation of Indian Armed Forces.”