Buy & buy as the Indian defence budget crosses the Rs 1 lakh crore ( 25 bn. $ ) mark

New Delhi, India, Mar 1, 2008: India is set to carry on its big-ticket defence purchases into the next financial year, with the government allocating for the first time over Rs1 lakh crore for defence. Significantly, over the revised estimates there is an increase of 27.32% in capital outlay and finance minister P Chidambaram has promised more if needed for purchases.

Chidambaram announced that the defence budget for 2008-09 would be Rs 105,600 crore (Rs1,056 billion/$26.5 billion), a 10% growth over last year's allocation of Rs 96,000 crore. However, it is a 14.06% growth over the revised estimates of Rs 92,500 crore, the actual spend in fiscal 2007-08.

Chidambaram told the Lok Sabha, "The allocation for defence is being raised by 10% from Rs 96,000 crore to Rs1 lakh five thousand and six hundred crore…I have assured the defence minister that more money would be provided if necessary, especially for capital expenditure."

Defence minister AK Antony said the 10% hike in defence budget was welcome and would help the armed forces to continue their modernisation drive. "I am happy. You have heard the finance minister say on the floor of the House that more money would be provided, if required, particularly for capital expenditure," Antony said.

To meet the increased financial demands from the sixth pay commission that would be announced in the next few months a fresh allocation would be made, senior ministry of defence officials said.

The defence budget accounts for 14.06% of the total central government expenditure of Rs 7,50,884 crore. When one excludes the plan outlays met from internal and extra budgetary resources of public enterprises and calculates, defence will take up 11 paise out of every rupee that the government spends.

The capital outlay has witnessed a significant increase, and is a clear indication that the big-ticket defence purchases would continue. In 2005-06, India was the largest importer of military weapons in the world.

Last year, the government spent Rs 37,705 crore on capital purchases, out of an outlay of Rs 41,922 crore. This year, the capital outlay is Rs 48,007 crore.

On the revenue side, the Army gets the bulk of the allocation at Rs 36,270.75 crore. The smallest of the three services, the Navy, will get Rs 7421.19 crore, and the Air Force Rs 1,08,55.56 crore.

 

 

Source: dnaindia.com