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India increases defense budget by 27%
India increases defense spending by 27%
IANS Thursday, July 08, 2004

NEW DELHI: India Thursday hiked its defence spending for fiscal 2004-05 by a whopping 27 percent, allocating Rs.77,000 crore ($16.74 billion) for the sector, largely with an eye on several big ticket arms deals currently in the pipeline.

In the national budget for 2004-05 presented in the Lok Sabha Thursday, Finance Minister P. Chidambaram proposed an increase of Rs.11,700 crore ($2.55 billion) over the allocation of Rs.65,300 crore ($14.51 billion) for defence in fiscal 2003-04.

But actual expenditure on defence during 2003-04 was about Rs.60,300 crore, with the new allocation marking a 27 percent hike.

Chidambaram noted the increased allocation was largely for concluding several major defence deals to modernise the armed forces.

He said the allocation for "capital expenditure", parlance for funds provided for arms purchases, would be hiked from Rs.20,953 crore ($4.57 billion) to Rs.33,483 crore ($7.31 billion)

"As promised in the national common minimum programme, the government is determined to eliminate all delays in the modernisation of the defence forces," Chidambaram said.

"Having regard to the trend of defence capital expenditure in recent years, it has become necessary to make a higher allocation this year."

The sharp hike in India's defence budget came almost a month after Pakistan increased defence spending by 20 percent for fiscal 2004-05. Pakistan had increased the defence outlay to Rs.19,392 crore ($3.32 billion), Rs.3,300 crore more than the budget for fiscal 2003-04.

India has recently inked several major defence contracts, including a $1.5 billion deal with Russia to acquire the Admiral Gorshkov aircraft carrier and a 795-million pound deal with Britain's BAE Systems to purchase 66 Hawk advanced jet trainers.

It has also clinched a deal with Israel for three Phalcon airborne early warning radar systems worth $1 billion.

Chidambaram, however, gave no indication that the Congress-led coalition government had plans to create a Rs.25,000 crore ($5.31 bn) rolling fund to buy sophisticated military hardware as mooted by the previous Bharatiya Janata Party-led regime in its interim budget in February.

Defence Minister Pranab Mukherjee had last month said such a concept was not constitutionally or legally valid.

Posted by Nikhil Khanna @ 4:08 PM


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