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Pranab tightens his purse strings

With the Defence Ministry failing to spend Rs 7,000 crore earmarked for modernising the Armed Forces in the last financial year...

Written by Manu Pubby | New Delhi |
February 27, 2010 1:35:04 am

With the Defence Ministry failing to spend Rs 7,000 crore earmarked for modernising the Armed Forces in the last financial year,the defence budget has got one its lowest hikes in recent years with an increase of only Rs 5,640 crore.

The four per cent increase,the lowest since 2001,will take this year’s budget to Rs 1,47,344 crore. This,experts say is not actually a hike as the increased allocation does not even cater for the annual inflation.

“Actually there is no hike in the defence budget this year as the marginal increase over last year’s BE figure (Rs 1,41,703 crore) is less than the annual rate of inflation,” says Brig Gurmeet Kanwal,Director of the Centre for Land Warfare Studies (CLAWS).

What has also concerned experts is that the capital acquisition budget — for new acquisitions — is only 40 per cent of the total money allocated to the Defence Ministry.

The main reason for the marginal increase is the inability of the Defence Ministry over the past seven years to spend money that has been allocated for capital expenditure. This year,the ministry has not spend Rs 7,000 crore that had been allocated for modernisation of the forces.

While it has not been detailed,the Army has been the biggest loser with close to Rs 3,000 crore earmarked to buy new equipment and for construction works being returned. The Navy has not managed to spend close to Rs 1,500 crore that had been marked for upgrading the naval fleet while the Air Force has also returned a substantial amount planned for acquisitions of aircraft and aero systems.

Experts are also worried about the increasing percentage of revenue expenditure in the defence budget which indicates that only a smaller fraction of money is being spent on modernisation. “The capital expenditure of the Navy and Air Force is higher than the Army but worldwide,if you need a balanced force a capital head of about 45 per cent is desired. It is also a shame that the capital spending has been revised downwards for the seventh year as the ministry has been unable to spend money,” says Uday Bhaskar,Director of the National Maritime Foundation.

The defence budget,however,remains at 13.2 per cent of the annual outlay of the Central government. Unlike in 2008,where it had dipped under 2 per cent of the GDP for the first time in decades,this year it is pegged at 2.12 per cent of the planned GDP.

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