New Delhi, July 8
Dropping previous NDA government’s proposal of having a three-year revolving fund for the armed forces, the Congress-led UPA Government, as expected, has kept defence high on its priority list with Finance Minister P. Chidambaram announcing a whopping almost 28 per cent increase in the defence budget for the year 2004-05, hiking it to Rs 77,000 crore from last year’s revised estimates of Rs 60,300 crore.
Pegging the country’s defence expenditure at almost 5.5 per cent of the GDP, the Finance Minister has also made an attempt to bring India’s defence spending almost at par with the other big spenders in the field in the Indian sub-continent. For the first time in the recent years India’s defence spending has come somewhere near that of Pakistan and China, both of which spend in the region of 5 per cent of their GDP.
Mr Chidambaram’s allocation for defence in this year’s budget is almost Rs 11,000 crore higher than the allocation made by previous Finance Minister Jaswant Singh in the interim budget presented in February last. Mr Jaswant Singh had allocated Rs 66,000 crore for defence in the interim budget as against Rs 65,300 crore allocated in 2003-04.
While announcing the hike Mr Chidmabaram expressed the UPA Government’s determination to carry on with the modernisation of the armed forces. Mr Chidambaram pointed out: “As promised in the NCMP, the government is determined to eliminate all delays in the modernisation of the defence forces”.
Having regard to the trend of defence capital expenditure in the recent years, it has become necessary to make higher allocation, he said. “Accordingly, I propose to increase the allocation for defence to Rs 77,000 crore as against Rs 65,300 crore in Budget Estimates 2003-04”, he said.
The budgetary allocation for defence this year is Rs 16,700 crore more over last year’s revised estimate of Rs 60,300 crore. The budgetary allocation this year surpasses the Defence Ministry’s own projections of 12 to 15 per cent hike. Today’s allocations amount to a sum at least Rs 7,000 crore more than the Ministry’s own projections during the pre-Budget discussions with the Finance Ministry.
The substantial increase announced would ensure availability of adequate funds for meeting security threats and for modernisation of the armed forces as the defence establishment awaits clearance at the highest level for the purchase of a large number of items for the three services. This is also the first time in recent years that there has been a hike in the defence budget in the real terms. Last year there had been hardly any hike in the budgetary allocation with Rs 9000 crore returned unspent and the government again allocating Rs 9,300 crore meaning an actual increase of just about Rs 300 crore.
The Finance Minister gave clear indications that the government’s stress was again on providing the cutting edge to the armed forces. As in the past, there has been an increase in allocation for acquisition of arms, equipment and aircraft for the three arms of the Indian defence.
In fact the government has more than doubled the allocation for the
capital outlay to Rs 33,482 crore from last year’s revised estimates of Rs 16,906. As was the case in the last two years the sharp increase in the capital outlay reflects the Government’s mood to go ahead with all the acquisitions, which have been in the pipeline for some time now.
In the capital outlay, the Indian Air Force and the Navy have got a lion’s share with more than Rs 12,825 crore allocated for the aircraft and more than Rs 4460 crore allocated for the naval fleet. The Army and the Air Force get more than Rs 6520 crore and Rs 1500 crore, respectively, for other equipment.
The substantial increase in the capital outlay for other equipment for the Army, from the revised estimate of Rs 2910 crore to Rs 6521 crore also reflects the government’s decision to give army a go ahead to some major acquisitions.
In line with the trend of the past three years, the NDA government failed to utilise a whopping Rs 4,000 crore in 2003-04 spending only Rs 16,906 crore against last year’s budgetary allocation of Rs 20,952 crore on capital outlay. This happened even after creating a separate budget head for the capital outlay, a trend which the new government has continued. With the capital outlay forming a separate head, the budget estimates of the Army saw a fall, while there is a marginal increase in proposed spending for the Air Force and the Navy.
The allocation for the Army in the current year is pegged at Rs 27,828.99 crore against last year’s revised estimates of Rs 28,276 crore. Budgetary grants for the Navy shows a marginal increase to Rs 5,293 crore against last year’s revised estimates of Rs 4,910 crore.
Allocation for the Indian Air Force has been raised from Rs 7847.29 crore to Rs 8468.40 crore.
The DRDO allocation in the current year will be Rs 2343.16 crore as against last year’s revised estimates of Rs 2699.20 crore.
