India's defence spending will for the first time ever cross the Rs 1 lakh crore (Rs 1 trillion) mark with the Government on Friday announcing a 10 per cent raise in the allocation for the year 2008-09.
In a clear signal that there would be no let up in the ongoing mammoth modernisation drive of the armed forces, Finance Minister P Chidabaram said that the defence allocation for the coming year would be Rs 1,05,600 crore, a hike of 10 per cent from last year's allocation of Rs 96,000 crore.
But in actual terms, the hike is 14.16 per cent as that of last year, as the Defence Ministry could only spend Rs 92,500 crore, leaving a sum of Rs 3,500 crore unspent, apparently due to two major contracts for purchase of helicopters and 155 MM artillery guns not going through.
It was amply clear that the budget will focus on continuing upgradation of armaments with the allocation on capital outlay running into Rs 48,007 crore, a jack up of almost 23.3 per cent over last year's outlay of Rs 37,705 crore.
Capital estimates last year were Rs 41,922 crore, of which the Defence Ministry only spent Rs 37,705 crore. Though there was substantial hike in defence budget, India's defence spending continued to be below 2 per cent of the GDP, far less as compared to Pakistan's 5 per cent and China's almost 7 per cent.
Over the past few years under the modernisation programme the army has inducted new frontline tanks, UAVs, missiles and new infantry weapons, while, the Navy has received stealth warships, missiles and submarines.
India has just floated its biggest global military tender for the purchase of 126 fighters and the continued larger budgetary allocation points to some more big ticket armament purchases in the coming days.
The Army with a force strength of over 1.3 million men continues to be biggest recipient of the defence budget with a allocation of Rs 36,270 crore for the year 2008-09. The allocation for Army has been raised by Rs 2,052 crore and marks a six per cent increase over last year's revised allocation of Rs 34,291 crore.
The allocation for Air Force has been marginally increased by 4.6 per cent to Rs 10,855 crore over last year's revised estimate of Rs 10,354 crore.
Navy has got a similar hike of Rs 329 crore with its outlay raised to Rs 7,421 crore from last year's revised figure of 7,092 crore.
The Defence Research and Development Organisation have also received a boost with a hike of 6.2 per cent. The current DRDO outlay has been pegged at Rs 3,393.59 crore against last year's figure of Rs 3,196 crore.
