NEW DELHI: A burgeoning military pension bill created by the One Rank One Pension (OROP) scheme has caused an unprecedented cut in the modernisation outlay of the defence ministry, leaving less money available for buying new equipment for the armed forces. It is the first time that defence pensions have overwhelmed money allocated to modernise the armed forces, with the ministry seeing an 8.5% reduction in the capital outlay. It was also the first occasion that a finance minister did not mention ‘defence allocation’ even once during his speech. The reduced allocation for modernising has also cast a shadow on the growth potential of the fledgling private sector in defence that relies only on government orders. Uncertainty has also emerged over several pending acquisitions such as the Rafale jet deal. It is another matter that the ministry has also failed to spend funds allocated for buying new equipment — over Rs 11,595 crore, or 13.4%, of the defence acquisition outlay has been returned this financial year. The government last year approved OROP plan, a long-awaited demand of retired military personnel to equalise pension payments despite the huge fiscal burden. If pensions are included, the increase in defence allocation is over 9%. But if pensions are excluded, allocation in the overall defence budget has risen barely 1.16% from a year ago. This will not even suffice to meet the inflationary pressures and the increase in salaries this fiscal.