India has hiked its defence budget by 12 per cent as part of efforts to modernise its armed forces, it was announced on Thursday, as the general budget was revealed.
Finance Minister Arun Jaitley set the military budget at $38.35 billion (2.29 trillion Indian rupees) for 2014-15, 50 billion rupees more than what the previous government agreed to in an interim budget earlier this year.
The Foreign Direct Investment caps were loosened to 49 per cent from 26 per cent, in the hope of drawing greater interest from India’s main arms suppliers and reshaping the defence industrial base, dominated by state-run firms. "Companies controlled by foreign governments and foreign private sector are supplying our defence requirements to us at considerable outflow of foreign exchange," said Jaitley, who is also the defence minister.
Another 10 billion rupees was allocated towards the One Rank One Pension scheme that aims to standardise pensions across ranks in the Indian defence services.
A special 50-billion-rupee increase in the capital outlay in the budget suggests that while the outlay has been hiked, big ticket items like the 126 fighter aircraft that India has been negotiating to buy will not be purchased this financial year.
Thursday's budget also included 10 billion rupees ($167 million) for railway lines in border areas that is expected to be targeted at areas neighbouring Pakistan and China. India has eyed Chinese investment in railways near its border anxiously, with Beijing ploughing billions of dollars into infrastructure in Tibet.
Global arms firms are wooing India in the hope of landing multi-billion dollar deals and New Delhi is aiming to leverage some of that buying power to get a transfer of technology and end the overwhelming reliance on imports.
"There can be no compromise with the defence of our country," Jaitley told parliament.
"Modernisation of the armed forces is critical to enable them to play their role effectively in the defence of India's strategic interests."
Jaitley said last month he aimed to speed up buying in the interests of ‘national security’, while experts expect a more muscular foreign policy under the new adminstration.
Funding madrassa reform
India's new government announced 1 billion rupees ($16.7 million) "for the modernisation of madrassas" as part of the budget for the upcoming fiscal year. India is home to an estimated 140 million Muslims, according to a 2006 landmark government report.
Critics say madrassas lack trained teachers and fail to equip their students to compete in the modern world when most middle-class Indian families are trying to get their children into English-medium schools. With additional input from
Published in The Express Tribune, July 11th, 2014.