Matching China: India hikes defence spending by 17%

Last year New Delhi increased its defence budget by 11%.

Aditi Phadnis March 17, 2012


India on Friday boosted military spending by 17% to $41 billion for the coming year as it seeks to counter China’s rapid military buildup and Pakistan.

The government, engaged in a massive programme to upgrade the country’s ageing military hardware, increased defence spending to 1.93 trillion rupees ($41 billion) for the financial year ending March 31, 2013. Of this, $17.5 billion will be reserved for procuring new equipment.

“This allocation is based on present needs and any further requirement will be met,” Finance Minister Pranab Mukherjee told lawmakers in announcing the 2012-13 budget in parliament.

The rise follows an 11 per cent increase in defence spending in the previous year’s budget. The move is also seen as a way to counter China, which had earlier this month announced an 11.2 per cent hike in military spending for 2012 to $106.41 billion.

The capital expenditure of the armed forces – which goes towards purchase of equipment – was set at around $ 17 billion, a 15.7 per cent hike from last year’s capital allocation. Of this, 70 per cent will go towards servicing contracts already signed. The rest will be reserved for the procurement of new equipment, including new aircraft from French company Rafale.

Commenting on the ballooning revenue aspect of the defence budget, Dr Laxman Behera of the Institute of Defence Studies and Analyses said: “Pay and allowances are obligatory in nature and the government has little control over their growth, given the mandatory increase in annual pay and dearness allowances. Moreover, most of today’s pay and allowances constitute tomorrow’s defence pensions, over which also the government has little control. The uncontrollable growth in these two components has great implication on other aspects of the defence budget.”

India, one of the biggest importers of military hardware in the world, is also racked by major internal security problems.

It is currently finalising a deal with France’s Dassault Aviation to buy 126 Rafale fighter jets in a contract worth an estimated $20 billion, apart from a $600 million deal for 75 Pilatus PC-7 basic trainers for its air force.

However, the outlays indicate that the final go-ahead for this expenditure might be rolled over to the next financial year. Several artillery purchases for its army are also due. In particular, the proposal to buy 145 ultra-light howitzers from the US under a government-to-government sale is also progressing.

Published in The Express Tribune, March 17th, 2012.


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