India bumps military budget despite sluggish growth

BJP govt is already grappling with the country's worst slowdown in a decade

NEW DELHI: India on Saturday bumped its military spending by nearly 6% as Prime Minister Narendra Modi's government unveiled its annual budget a day after official data showed that Asia's third-largest economy recorded its slowest expansion since the 2008 global financial crisis.

The BJP government is already grappling with the country's worst slowdown in a decade with falling employment, consumption and investment. Finance Minister Nirmala Sitharaman mentioned that growth would slip to 5% this year which ends on March 31.

Sitharaman did not mention the military allocations in her budget speech, saying only that "national security is a top priority ". However, documents showed the military spending increased to $47.418 billion from last year’s $44.744 billion, including $15.58 billion for buying new weapon systems.



The major chunk of the allocation – $6 billion – went to the Indian Air Force (IAF) on the back of its heavy committed liability of big ticket projects like Rafale fighter jets, Apache and Chinook helicopters and payments for S-400 missile systems from Russia.

The army got $4.557 billion and the navy got $3.755 billion. The Indian Navy plans to expand its fleet to 175 warships by 2027 from the current 130 warships. Some 50 warships were under construction in shipyards in and outside the country.

In a sprawling three-hour speech peppered with references to ancient Indian history and poetry, Sitharaman sought to boost growth by raising spending on farms and expressways and offered cuts in personal taxes, but the measures fell short of market expectations and battered stocks.



While presenting the budget for the financial year beginning April 1, Sitharaman said that Rs2.83 trillion ($39.8 billion) will be spent in in coming years on agriculture and allied activities, up 5.6% on the previous year.

She vowed to spend $50.7 billion on a federal water scheme to address challenges facing one of the world's most water-stressed nations. Agriculture accounts for near 15% of India's $2.8 trillion economy and is a source of livelihood for more than half of the country's 1.3 billion population.

Sitharaman announced a new personal tax system including cuts for those ready to give up a myriad of tax breaks. She said the fiscal deficit target for the current financial year was now 3.8% of GDP, up from an earlier 3.3%. It will edge down to 3.5% next year.

Prime Minister Narendra Modi's right-wing government has been trying desperately to revive the economy, which has flagged for several quarters, with per capita consumption falling for the first time in four decades.

Rahul Gandhi, former leader of the opposition Congress party, told reporters the budget was devoid of "any concrete strategic ideas" to tackle unemployment, which is at a four-decade high. "Lot of repetition, rambling and all talk but nothing happens. The country is of course suffering and youngsters feel they don't have a future," he said. (With additional input from News Desk)