With no threat emanating from the western or northern borders, the Defence establishment had to contend with an overall eight per cent increase in its annual outlay though it wanted a 40 per cent hike from the past year.
Finance Minister P. Chidambaram today allocated Rs 83,000 crore to the Defence Ministry, noting that for the first time in five years the armed forces had utilised the Rs 77,000 crore allocation for the past fiscal.
The Capital outlay that is used for acquisition of weapons and equipment was increased marginally to Rs 34,375 crore, just 2.6 per cent over last year. This is because the Ministry has already made provisions for big ticket deals like Admiral Gorshkov (now called INS Vikramaditya), Hawk AJT, PHALCON AWACS and self-propelled artillery guns.
However, the marginal increase in the Defence Budget is also due to the fact that New Delhi’s relations with Islamabad are back on track and peace is in the air. The growing bilateral relations with China that are being driven by multi-billion trade ties are also reflected in the Budget.
The Army has been granted Rs 31,242 crore this year, up 12 per cent from last year, while the Air Force saw a six per cent allocation hike to Rs 9,004.61 crore. The Navy’s allocations increased 13 per cent to Rs 6,027.35 crore.
Though the MoD had marked modernisation of IAF’s aircraft fleet as critical to regional military balance, capital allocated was scaled down to Rs 9,564.90 crore this year, as against Rs 12,825 crore it was given in the last Budget.
Former Army chief Gen V.P. Malik, an advocate of higher defence spending, said: ‘‘It is a disappointment. Modernisation plans will be affected, and so will the country’s deterence capability. There was also no mention this year of the defence modernisation fund. The Ministry may not have adequate funds for new contracts with this Budget.’’
The Army’s requirement for more war helicopters, however, has got it an increase of over 50 per cent to Rs 939.13 crore. The Navy was allocated Rs 5,417.70 crore for ships and vessels, 21 per cent over last year. The hike indicates that the Scorpene submarine deal with France will be cleared.
The DRDO got a more than 20 per cent allocation this year to Rs 2,814.48 crore, up from last year’s Rs 2,343.16 crore. Part of this hike is to push the indigenous airborne early warning system. Budgetary allocations to the MoD alone are up 50 per cent to Rs 1,500 crore.
Defence analyst K. Subrahmanyam said: ‘‘The Rs 83,000 crore will cover inflation and growth. But in terms of percentage of GDP, we have not pushed it up. It is at the same level and that is important. The marginal increase in capital outlay is probably for orders already placed on trainer aircraft, Sukhois and the Admiral Gorshkov aircraft carrier.’’