Shopping at hand, Defence allocation jumps by Rs 6,000 cr

Spiked contracts, including the Denel controversy are understood to have contributed to the Ministry’s inability to use all allocated procurement funds from the previous year. The defence budget as percentage of GDP, however, has taken a hit. This year, it stands at just 2.27 per cent of GDP, against 2.5 per cent last year. A percentage of 3 per cent is promised if an economic growth rate of 10 per cent is achieved.

Defence Minister Pranab Mukherjee said it was a ‘‘very good budget’’ and signalled his intention to use it to continue the UPA government’s drive to modernise the armed forces.

DRDO received a hike of Rs 209.68 crore, about 7.4 per cent over the 2005-06 revised estimate of Rs 2798.4 crore. And with the growth of number of pensioners, the minister has increased pensionary allocations by Rs 509 crore to Rs 13,224 crore. With the one-rank one-pension scheme announced on Republic Day, the Budget seems to have addressed service pensioner concerns at least in part.

The revenue allocations have been hiked 5.8 per cent at Rs 33,205 crore, 5.75 per cent at Rs 6791.78 crore and 7.8 per cent at Rs 10,087.36 crore, for Army, Navy and IAF respectively.

For procurement of new weapons, the Army now has a little over Rs 10,000 crore a touch over last year, but with deals for tanks and artillery put off again, most of it is likely to go into procurement of missiles, Russian rocket artillery and infantry modernisation.

The real gainer is, however, the IAF which has received almost Rs 15,000 crore just for purchasing weapons, almost 24 per cent over last year’s capital outlay. Since the purchase of fighter aircraft is still a few years away, much of it is likely to be infused into upgrade programmes and instalments for the Hawk trainers and Israeli Phalcon AWACS.