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The Indian government has released its Union Budget for the year 2010-11, with an 8.3 per cent hike in the defence expenditure. The Indian Finance Minister, Pranab Mukherjee, presented the Budget in the Lower House of Parliament and hiked the defence allocation to $29.46 billion, including the $12 billion for capital expenditure.
Analysts observed that though the defence expenditure has been increased by $2.21 billion, from the previous year’s defence budget, the increase works out to only 3.98% since $28.34 billion had originally been allocated for 2009-10, but this was later revised to $27.25 billion. Despite various suggestions to further hike the defence allocation in view of India’s security concerns in recent times, the defence allocation continues to amount to 2.5 % of the GDP.
As for the division of the defence budgetary allocation, the Indian Army continues to be the favourite with the largest chunk of $11.79 billion this year. However, this is $87.8 million lower than in the revised allocation for 2009-10 and $255 million lower than the original allocation for the fiscal.
The Indian Air Force (IAF) has been allocated $3.16 billion, which is $105.8 million higher than the revised allocation of $3.04 billion for the previous fiscal, $178.4 million higher than the $3.2 million hike from the revised figure of $1.88 billion for the previous fiscal and $202.2 million more than its original allocation of $1.68 billion.
As for the state-owned Ordnance Factory Board (OFB), the allocation for these defence ordnance factories has been slashed by $367 million to $399.8 million, against $766.8 million in the previous fiscal. The other towering defence organisation, the state-owned Defence Research and Development Organisation (DRDO) has got an increase of $176.2 million to $1.05 billion from its revised allocation of $875.8 million in the previous fiscal.
Finance Minister Mukherjee said that considering the importance of the country’s defence, if required, more funds will be provided in the future. The increase in the defence allocation has been marginal this year and the defence ministry is once again surrendering about $1 billion from the capital acquisitions account of the 2009-10 fiscal.
However, the current hike will seem marginal since the phenomenal 23% hike which Mukherjee had put into effect for 2009-10 fiscal will always overshadow any budgetary hikes. The finance minister explained that the hike was caused due to the rising security concerns following terror attacks in Mumbai.
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