India: Steep 34% hike in defence budget - Up to $29 Billion
India: Steep 34% hike in defence budget - Up to $29 Billion
(The Times of India, 6 Jul 2009, 1400 hrs IST, PTI)
NEW DELHI: With an aim of fast-tracking procurement of defence equipment, the government steeply hiked the budgetary allocation for defence to Rs
1,41,703 crore, a 34% increase over the previous fiscal.
The increase in real terms amounted to Rs 36,103 crore over last year's allocation of Rs 1,05,600 crore, and is apparently intended to speed up procurement of defence equipment and plug the security gaps exposed by the November 26 Mumbai terror attacks last year.
The 34% increase is substantial compared to the increase of only 10% effected in last year's budget
over Rs 96,000 crore allocated in 2007-08.
In fact, Finance Minister Pranab Mukherjee had allocated the same amount for defence in his interim budget presented in Parliament on February 16 before the Lok Sabha polls.
Despite the hike this year, India's defence spending is still at about 2% of the GDP, compared to China's 7% and Pakistan's 5%.
The defence ministry had returned nearly Rs 7,000 crore as unspent money
from its last year's capital outlay of Rs 48,007 crore as its plans to procure light utility helicopters and 155mm artillery guns did not fructify.
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India Boosts Defense Spending To About $29 Billion
(http://www.easybourse.com/ July 6th, 2009 / 11h58)
NEW DELHI (AFP)--India on Monday confirmed a huge increase in military spending and offered sweeping benefits to the police, linking the ongoing drive to ramp up national security to economic development.
Finance Minister Pranab Mukherjee hiked the defense budget for the financial year to March 2010 by 24% to INR1.42 trillion (about $29 billion) to partly fund a program to modernize India's 1.23-million-strong military.
The size of the increase had been flagged in a pre-election interim budget in February.
An attack by Islamist militants in Mumbai in November that left 166 people dead also prompted Mukherjee to grant additional funds for the paramilitary and state police.
New Delhi blamed "official agencies" in Pakistan for the carnage in Mumbai, but conceded the 10 militants who came undetected by the sea took advantage of India's antiquated maritime security and gaps in intelligence networks.
In addition to the defense budget, Mukherjee sanctioned an additional $143 million for the paramilitary and said he will also spend $456 million more to strengthen border security during the current fiscal year.
"Significant augmentation in the strength of the paramilitary forces is being done," Mukherjee said, adding the government will build 100,000 houses for personnel to "boost morale."
In a bid to stem discontent of retired soldiers from spilling into the ranks, he promised an attractive pension program for 1.2 million ex-military personnel, some of whom in recent months had taken their agitation to the streets.
Prime Minister Manmohan Singh said the security modernization program was crucial to the unhindered development of Asia's third-largest economy.
"Law and order is a prerequisite to sustainable development...so the modernization of our intelligence is a must," Singh told Doordarshan national television.
India's army is clamoring for helicopters, artillery, armor and infantry, while the air force is on the verge of buying 126 war jets worth almost $12 billion and the navy wants an aircraft carrier.
India, which is the biggest weapons buyer among emerging countries and has imported military hardware worth $28 billion since 2000, plans to sign further contracts estimated at up to $30 billion in the next few years.
However, strategy expert Uday Bhaskar noted the lion's share of the funds will be taken up by wages and pensions, and said: "The current defense allocation may look good, but it will not enhance the capability of the military in any way."
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Monday July 6th, 2009 / 11h58 Source : Dowjones Business News