The Defence budgeting system in Indian is not linked to the medium-term planning and cannot, therefore, play a useful role as a management tool or help rational allocation of resources. How this link is established is elucidated in this book, in a meaningful way through an interactive process. Even for better expenditure control, the planning and management functions have to be made an integral part of the budgeting system. Reforms need to be brought about in the process of budgeting, giving adequate attention to the planning phase, for establishing foals and priorities for resource allocation. An analysis of the model of 'responsibility budgeting' through 'New Management Strategy' is a special feature of the book.

Modernisation and capability building of the Armed Forces are important goals of resource allocation for Defence. For this purpose, Defence budgeting has to be linked to Long-Term Defence Plan (LTDP). Or the perspective planning. Drawing up LTDP requires strategic vision and clear policy goals. Adopting a business model of decision-making for capability-building has been advocated in this book. The long and medium-term planning need comprehensive Defence Review. This is because capability-based approach in planning begins by asking questions regarding 'what do we need to do' rather than what 'equipments we need to replace'. Capabilities are to be identified based on an analysis of operational requirements and tasks to be performed as has been undertaken by many western countries in the post-cold war period. Only within such a framework, can Defence planning and budgeting aim at achieving efficiency and effectiveness, and accountability of higher management for 'outcome' can be established.

The author stresses the imperative need for conducting such a Defence review for establishing a framework as a major step towards achieving an effective Defence.