Delhi raises defence spending by 11.6 per cent

Hike in capital expenditure comes as New Delhi eyes major defence deals.

NEW DEHLI: India on Monday raised its defence budget by a hefty 11.6 per cent from Rs1.47 trillion last year to Rs1.64 trillion in the financial year 2011-12. Last year, New Delhi raised defence spending by 4 per cent.

Analysts say the current increase is a sign that New Delhi is going ahead with its planned defence acquisitions. High on the country’s defence shopping list is a record-breaking $10.5 billion fighter jet contract and other deals – which are likely to be signed later this year.

“In an effort to procure modern weapons systems and defence equipment, the government has earmarked Rs692 billion for capital expenditure,” Finance Minister Pranab Mukherjee told the Lok Sabha while presenting the budget.

Over 40 per cent of the defence budget will be spent on capital expenditure, according to Mukherjee. The rest will go towards maintaining the country’s armed forces. “Needless to say, any further requirement for the country’s defence will be met,” he said.

The Rs83.7 billion hike in capital expenditure comes at a time when New Delhi is looking to finalise big ticket deals to procure 126 multi-role combat aircraft, 197 light helicopters, 145 ultra-light Howitzers and C-17 heavy-lift aircraft for its military.

India has drawn up plans for spending over $100 billion on defence acquisitions in the next five to 10 years.

Of the total budgetary allocation for 2011-12, the army has been granted Rs642.5 billion,  the navy Rs105.9 billion, the air force Rs159.3 billion and Defence Research and Development Organisation Rs56.24 billion.

From the Rs692 billion capital outlay, the army got Rs189.9 billion, the navy Rs56.9 billion, naval fleet Rs73.2 billion and the air force Rs307 billion.

Defence Minister A K Antony termed the increase in allocation for his ministry as “good and positive”. “We welcome it as our concerns have been, by and large, addressed.” Minister of State for Defence M M Pallam Raju also described it as a “substantial” rise for his ministry in view of the Rs699.2 billion capital outlay. “This is a substantial increase,” he told reporters.

Independent experts, however, were not sure whether it would be sufficient for India’s needs. Gurmeet Kanwal, who heads the government-funded Centre for Land Warfare Studies, said the defence allocation was enough to proceed with the fighter aircraft deal, but warned it may not leave much room for other arms imports.

“In the first year there is a signing amount you have to pay which shouldn’t be a problem,” Kanwal pointed out. Ajai Sahni of the Institute for Conflict Management also said the increase was modest. “It’s not a dramatic increase if you take inflation into account. Military inflation will be even higher,” Sahni added.

The finance minister also made provisions for the recruitment of 2,000 youth in the five paramilitary forces. Jammu and Ladakh were allocated money for development. Both are part of the Indian state of Jammu and Kashmir.

With input from Reuters

Published in The Express Tribune, March 1^st, 2011.