3 The FY22 budget could have some additional fiscal space

To be sure, the 2021-22 Budget has also cut allocations on items such as defence pensions. Allocations for defence pensions have gone down from ₹1.33 lakh crore in 2020-21 (BE) to ₹1.25 lakh crore in 2020-21 (RE) and ₹1.16 lakh crore in 2021-22 (BE). This can be explained by a mix of two factors. The government may have finished paying arrears under the One Rank One Pension scheme or it could be targeting savings in pensions by increasing the retirement age of defence personnel as was reported by HT last year. If these policies have been/are being implemented, they could generate some additional resources for the government going forward.