Finance minister Nirmala Sitharaman on Monday unveiled a defence allocation of Rs 4.78 lakh crore including pensions, a rise of just 1.4 per cent from last year’s budget, disappointing veterans and officials who emphasised the Chinese threat at the borders.

Retired army officers and security experts said the meagre hike could threaten military modernisation at a time the armed forces faced an acute funds shortage.

“This increase is negligible considering the growing threat from China and Pakistan. The allocation actually represents a decline if one factors in inflation and currency fluctuations,” a former lieutenant general said.

“What happened to the Narendra Modi government’s muscular politics? The Chinese army has been inside our territory since last May and has been threatening to occupy more land. The defence budget is very disappointing to say the least.”

The overall defence outlay for 2021-2022 has been increased to Rs 478,195 crore from last year’s budgetary allocation of Rs 471,378 crore. Budget documents show that India spent an additional, unbudgeted Rs 20,776 crore on procuring emergency arms last year amid the standoff with China in Ladakh.

“A token rise of 1.4 per cent... a rise of Rs 6,817 crore. I suppose military should be happy budget hasn’t been slashed!” Colonel (retd) Ajai Shukla tweeted.

A defence ministry official said: “We were hoping for a substantial increase as this was the first budget after China’s occupation of Indian territory in eastern Ladakh. The paltry increase means our modernisation plans will continue to move at snail’s pace despite the government’s so-called muscular policy and national security pitch.”

He outlined the modernisation plans: the air force wants several combat planes and helicopters to replace its Soviet-era aircraft; the navy is seeking a dozen submarines to counter China’s ever-expanding presence in the Indian Ocean; and the army wants assault rifles, surveillance drones and body armour to bolster its combat prowess along the China and Pakistan frontiers.

“We are very disappointed at the meagre hike at a time our biggest current enemy, China, has been constantly modernising its weaponry,” an army official said. “China has increased its defence budget, which is four times ours.”

Sources said the Chinese army, estimated to be occupying close to 1,000sqkm of India-claimed territory in Ladakh, was constantly increasing its troop strength and bolstering its positions at the friction points.

A military veteran said the 15-lakh-strong armed forces continued to suffer from operational deficiencies and needed more funds.

“And, this was needed the most now with the threat from China and Pakistan having become more alarming,” he said.

Excluding the pension outgo, the allocation for the armed forces stands at Rs 3.62 lakh crore, compared with last year’s Rs 3.37 lakh crore.

Of this, Rs 1.35 lakh crore has been earmarked as capital outlay to buy new weapons, aircraft, warships and other military hardware. The capital outlay in defence budget 2020-21 was Rs 1.13 lakh crore.

“I specially thank PM& FM for increasing the defence budget to 4.78 lakh cr for FY21-22 which includes capital expenditure worth Rs 1.35 lakh crore,” defence minister Rajnath Singh tweeted.

“It is (a) nearly 19 per cent increase in defence capital expenditure. This is (the) highest ever increase in capital outlay for defence in 15 yrs.”