July 11, 2014

Not really a dream budget for defence’

Though the Narendra Modi govt has started off with a proverbial military bang, the defence budget does not seem to be a dream one.
 This “similar to interim defence budget” has a proposal for an outlay of Rs. 2.29 lakh crore, a 12.4% increase over the last year’s budget of Rs. 2.036 lakh crore.
Interestingly, the defence budget grew 17% in 2011-12 and 12% in 2012-13. A mere 1.74% of the projected GDP, it is a far cry from the stated goal of spending 3% of the GDP on defence which was backed by the Parliamentary Committee on Defence but in reality, a figure that has never been achieved in any budget.
After the “dark ages” of defence acquisition when bureaucratic lethargy coupled with the lack of resources held in abeyance most of the modernization plans, this budget should at least have been successful in overcoming the resource crunch while the new political directives would overcome the apprehensions of the bureaucracy.
The defence ministry has also said that a deal of US$2.5 bn is nearly ready for the 15 CH 47 F Chinook and the 22 AH-64 D Apache helicopters which is again debatable as the Air Force acquisition outlay has decreased slightly. With Rs. 19,000 crore promised for the Phase II and III for completion of INS Vikrant, the Navy is also keen on acquiring 45 MiG-29K naval fighters worth over $2 billion meant to operate both from INS Vikramaditya and INS Vikrant.
Raising the FDI limit from 26% to 49% also assuage the demand for a level-playing field by Indian competitors.
The military budget of $132 billion of China for 2014 is nearly three-and-a-half times the Indian defence budget of approximately US $37 bn. Considering that the actual Chinese military budgetary spending is often 40% to 60% higher than the official figure, the current rise in India’s spedning is insignificant.
The double-digit growth in the defence budget, although looks impressive from outside, has a poor outlook on the modernisation front. Much of the hike in the budget is consumed by the increase in salary, leaving very little for real modernisation.
Hence from the point of view of defence modernization, it is doubtful if one can term the budget as a dream one though it does provide “acche din” for the defence personnel.


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