11 percent hike in defence budget to push modernisation (Second Lead)

NEW DELHI - In a sharp 11 percent increase in India’s defence budget to aid rapid modernisation of the armed forces, Finance Minister Pranab Mukherjee Monday allocated Rs.164,415.19 crore (Rs.1.64 trillion/$36 billion) for its military in 2011-12.

Amounting in real terms to an increase of Rs.17,071 crore, the jump in the defence budget was 11.59 percent over 2010-11 budgetary estimates of Rs.147,344 crore, and an 8.47 percent jump from revised estimates of Rs.151,582 crore.

India’s defence budget is estimated to be the 10th largest worldwide, but is only just over 2 percent of the world defence spending, according to Stockholm International Peace Research Institute (SIPRI) data for world military expenditure in 2009.

India’s neighbours China and Pakistan are estimated to be spending over $90 billion and $10 billion annually respectively on their military.

Mukherjee, while presenting the budget for 2011-12 in the Lok Sabha, said the capital outlay too had been ramped up to Rs.69,199 crore.

This is an over 15.33 percent increase from the 2010-11 capital outlay of Rs.60,000 crore and the revised estimates of Rs.60,833 crore. Capital outlay is meant for new purchases and developing military infrastructure.

“In the budget for 2011-12, a provision of Rs.164,415 crore has been made for the defence services, which includes Rs.69,199 crore for capital expenditure,” Mukherjee said.

“Needless to say, any further requirement for the country’s defence would be met,” he said, in a promise that will be cheered by the defence ministry mandarins, who hope to finalise several important arms deals such as the $10.4-billion contract for 126 combat planes in the 2011-12 fiscal.

Compared to the 2010-11 hike of 3.9 percent, the defence budgetary increase for 2011-12 seems huge, whereas in 2009-10, the defence budget witnessed a whopping 34 percent scale up over the previous year.

Reacting to the budget proposals, Defence Minister A.K. Antony said the armed forces’ concerns over its acquisition programmes had been addressed.

“We welcome the budget. On the whole, it is a positive and good budget. Our concerns have by and large been addressed. The finance minister has also said that should there be any fresh requirement, it will be met without any difficulties,” Antony said.

The defence budget this year accounts for approximately 13 percent of the total outlay of Rs.1,257,729 crore envisaged for 2011-12.

A senior defence official, reacting to the budget proposals, said, “The defence outlay has factored in new acquisitions as part of the modernisation plans under the capital expenditure.”

The Indian armed forces are going through a major modernisation programme with future purchases including 10 C-17 heavylift transport aircraft, 22 attack helicopters, 15 heavylift helicopters, four types of artillery guns, special forces equipment, six advanced submarines, and 197 light utility helicopters.

Under the capital outlay, army would get Rs.18,988.04 crore, the navy Rs.5,688.72 crore, the naval fleet Rs.7,320.02 crore, the air force Rs.29,722.74 crore and defence research and development Rs.4,628.30 crore.

Interestingly, the government also allocated Rs.118.32 crore in 2011-12 under capital outlay for “prototype development under make procedure”, but did not specify what the product was. For the same prototype, the revised estimates of 2010-11 fiscal too mentioned a Rs.81.95 crore allocation.

The revenue outlay for defence for 2011-12 stood at Rs.95,216 crore, a 9 percent hike from last year’s Rs.87,344 crore. Of the revenue expenditure, Rs.64,251.55 crore go to the army, Rs.10,589.06 crore to the navy, Rs.15927.95 crore to the air force and Rs.5,624.81 crore to defence research and development.

The defence ministry has, for the first time in several years, reported utilisation of capital outlay last year over and above what was allocated in the budget estimates. For 2009-10 fiscal, the ministry had returned Rs.5,539 crore unspent.