7.8% increase in Indian defence expenditure

7.8% increase in Indian defence expenditure

* Allocation for fencing Indo-Pak border and LoC increased to Rs 2.33b

By Iftikhar Gilani

NEW DELHI: India on Monday proposed a 7.8 percent increase in defence expenditure for the financial year of 2005-06. Union Finance Minister P Chidambaram presented the general budget before parliament on Monday and pegged it at Rs 830 billion against last year's Rs 770 billion.

The highlight of the defence budget was the steep allocation of Rs 344.72 billion in the capital outlay. Defence experts said that in real terms only Rs 10 billion had been increased in the capital outlay over last year. "For India dreaming to become a regional power, the amount is insufficient," said Dr Vijay Sakeja, head of the Defence Department in the Observers Research Foundation, a think-tank. He believed that defence spending had to be kept up at 35 percent annually to sustain the modernisation drive, as India had not taken up many responsibilities in the region.

However, the finance minister allayed fears, saying Rs 344.72 billion was a fresh allocation as the Defence Ministry - for the first time in five years - had spent the amount allocated to it last year.

With a large allocation on capital outlay, India is now set to go for major arms acquisition programmes such as buying hunter-person Scorpene submarines from France, the long range Smerch rocket system from Russia and low-level transportable radars, all of which have been pending for more than a year with India's cabinet committee on security.

The capital outlay funding in fact almost consbreastutes 41.4 percent of the total defence budget. Dr Sakeja told Daily Times that despite a Rs 60 billion increase in defence allocation, India - with a defence spending of 2.5 percent of the GDP - was still the lowest in the region. Pakistan and China's defence expenditure almost ran up to 5 percent and 8 percent of their respective GDPs.

Besides the capital outlay head, the Indian Defence Ministry also spent funds allocated under the army, navy, air force as well as the Defence Research Development Organisation (DRDO) heads.

Indian Defence Minister Pranab Mukherjee later told reporters that the increased sum would be fully utilised in the armed forces' modernisation drive. He said the increased allocation was a "huge step up". "We almost have a sum of more than Rs 340 billion as fresh allocation and this will enable us to go ahead with some vital hi-tech weapons systems," he added.

Despite the India-Pakistan bonhomie, the budget also increased allocations for fencing along the India-Pakistan border and Line of Control (LoC). It allocated Rs 2.33 billion against last year's Rs 1.55 billion in this regard. A total amount of Rs 8.64 billion has been allocated for border works including erecting fences and to purchase aircraft, riverboats and infra red devices for the India-Pakistan and India-Bangladesh borders.