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PSEB SS Defence Studies study materials
PSEB SS Defence Studies study resources

PSEB SS Defence Studies: Defence Administration, Budget and Acquisition

PSEB SS Defence Studies · Work through your exam, one topic at a time.

All guide sections

Defence Administration, Budget and Acquisition

Defence Administration, Budget and Acquisition tests how defence money is raised, allocated and spent, and how equipment is bought. It is an administrative domain, not a tactics domain.

Key institutions

  • The Ministry of Defence is headed politically by the Raksha Mantri and administratively by the Defence Secretary. Service chiefs give military advice; the CDS heads the Department of Military Affairs.
  • DRDO conducts defence research and development. Defence Public Sector Undertakings (for example HAL, BEL, BEML, and the seven DPSUs created from the Ordnance Factory Board in 2021) produce equipment.
  • The Defence Acquisition Council, chaired by the Raksha Mantri, gives approval in principle for major acquisitions. The Defence Acquisition Procedure (DAP) 2020 sets categories and procedures.

Budget and acquisition rules

  • Revenue expenditure covers salaries, allowances, maintenance, fuel and routine stores. Capital expenditure covers new equipment, weapon platforms and major infrastructure.
  • DAP categories include Buy (Indian-IDDM), Buy (Indian), Buy and Make, and Make. Indigenous content and offset obligations are checked against the category.
  • An offset is a contractual obligation on a foreign vendor to reinvest or source part of the value in the buyer's country; it is not a fee or a bribe.

Worked example

A proposal buys 200 armoured vehicles designed in India with 60% indigenous content. It is capital expenditure and, under DAP 2020, fits Buy (Indian-IDDM) because the design is Indian and indigenous content is at least 50%. The same year's soldiers' salaries are revenue expenditure. The reasoning is classification by purpose (asset creation versus consumption) and by sourcing and design, not by the size of the contract.

Traps

  • Putting salaries under capital because they are defence.
  • Confusing DRDO (R&D) with DPSUs (production).
  • Treating offsets as illegal payments.
  • Assuming higher defence spending automatically means better readiness; maintenance and training are revenue costs.