Analysts said the report, attributed to unnamed Defense Ministry sources, could be part of an elaborate effort by armed forces lobbyists to stop President Dilma Rousseff's government from cutting back on military expenditure.
The report in the Folha de Sao Paulo newspaper also pointed to regional disparities in the distribution of modern amenities, equipment and perks within the armed forces with the best and the most concentrated in the prosperous southeast of Brazil.
Former President Luiz Inacio Lula da Silva embarked on an ambitious multibillion-dollar military regeneration program, including revival of Brazil's defense manufacturing industries that became dormant at the end of military rule in the late 1980s. But the program was cut short when Rousseff took office amid fears that lavish state spending would feed runaway inflation in an economy already under pressure from an overvalued currency and effects of a weak U.S. dollar.
Brazilian government economic strategists have cautioned against over-optimism over expectations of Brazil's continued growth on the strength of commodity exports and called for restraint in state spending until manufacturing and other sectors gain more ground and start taking a great share in gross domestic product.
The Folha de Sao Paulo report claimed nearly half of the military hardware wasn't fit for military duty. It said of 1,953 tanks and armored vehicles on the army's inventory, only 1,079 are operational.
Similarly, it said, the Brazilian navy has 98 vessels of which 48 are combat ready or are capable of support tasks while the rest remain in port or dry docks.
Also, in the Brazilian air force, only 85 of 208 fighter bombers are operational and only 100 of the 298 aircraft in air transport fleet and 27 of the 73 helicopters can fly, said the report.
No independent confirmation of the claims was immediately available.
Lula's military regeneration program was popular with the military and nationalist factions who were also drawn to his populist declarations of Brazil's pre-eminence in a regional geopolitical framework.
At the height of the military spending program, Brazil signed agreements with France for the joint construction of five conventional submarines, plus a nuclear powered submersible and 50 EC-725 helicopters from Eurocopter, an affiliate from the European group EADS.
The modernization plan also included the purchase of 36 or more fighter bombers. An initial bidding process got the French Dassault's Rafale, the Swedish Saab's Gripen and the Boeing Co.'s Super Hornet F-18 into the race. But the planned multibillion-dollar acquisitions are now under indefinite review.