Money > Budget > Budget News & Analysis FEBRUARY 8, 2002 I 17:55 IST rediff.com
  Budget Special
The Union Budget 2001-02
Economic Survey 2001-02
Exim Policy 2001-02
Credit Policy 2001-02
Railway Budget 2001-02
Budget Tutorial
Budget Process
Budget 2000-01
Budget 1999-2000
 



10% increase in defence budget likely

Aditi Phadnis

The defence budget for the next fiscal is expected to be of the size of Rs 690 billion, which is the same as what had been proposed by the defence ministry.

The sum is approximately 10 per cent more than the allocation for the current fiscal at Rs 620 billion.

The defence ministry feels, it can utilise the sum as the money surrendered by the three Services this year is approximately half of that left unutilised last year, indicating that the forces have put behind them, corruption in procurement unveiled by the website Tehelka. It also means a saving for the government in a year of acute revenue shortfall.

This figure (Rs 690 billion) includes the defence deals to be finalised with Russia this week, and puts at Rs 10 billion the cost of deployment of troops along the India-Pakistan border. Kargil war had cost the country Rs 18 billion.

There are two significant elements of this year's budget. For the first time, a new fund - albeit with a token seed amount of around Rs 3 billion - will be set up to finance defence exports credit from India to neighbouring countries.

Second, figures show that the rate of utilisation of funds by the Services has improved dramatically. Last year, the three Services had returned more than Rs 70 billion to the finance ministry. This year, the figure is likely to be around Rs 35-40 billion. While the Navy has surrendered no funds, the Army has given up Rs 3-4 billion. The rest of the amount has been surrendered by the Indian Air Force.

According to MoD sources, the drop in surrendered funds is largely because of the newly operational Defence Procurement Board which is meant to streamline the requirement and procurement of equipment by the Services. Several procurement proposals have been cleared on the fast track mechanism and directly by the Cabinet Committee on Security.

Several expensive aircraft deals - the Advanced Jet Trainer, for instance and the AWACs - have not been clinched yet. If they are, between now and the budget, it is possible that the surrendered amount will be made good in the supplementary budget.

Both the finance minister and the Prime Minister have in the last one month, pledged to provide such funds for security as may be necessary, but have pointed out that this hurts development.

The finance ministry had initially proposed Rs 660 billion allocation for the defence budget in fiscal 2002-03 but the recent defence deals with the Russian Federation have pushed up the estimate by about Rs 20 billion. The defence allocation as per the revised estimates for the fiscal 2000-01 was Rs 544.61 billion.

YOU MAY ALSO WANT TO READ:
The Rediff Budget Special
Run-Up To The Budget
Money


 
  © 1996 - 2002 rediff.com India Limited. All Rights Reserved.