Analysts, industry captains welcome defence allocation

Welcoming the Rs 60,000 crore allocation for armed forces' capital expenditure in the Budget, defence analysts and industry captains expressed on Friday doubts whether the ministry would be able to fully spend the amount.

This year's capital outlay is a 9.5 per cent increase over last year's outlay of Rs 54,824 crore and a 25 per cent rise from the revised outlay of Rs 47,824 crore.

"The hike in capital expenditure is more than sufficient but I have my doubts whether the forces would be able to spend it as the Defence Ministry has returned over Rs 13,000 crores in the last two years," senior defence analyst Deba Mohanty said here.  Samtel Display System's Executive Director Puneet Kaura said termed the four per cent increase in total outlay as "marginal" and said "this seems to be a practical move since most of the funds have remained unspent over the past few years."

With a 4 per cent increase, Defence Ministry has allocated Rs 1,47,344 crore for the year 2010-11 from Rs 1,41,703 crore in 2009-10.

Some of the industry players felt the increase in capital expenditure would be beneficial for India's private sector.

"Capital expenditure of Rs 60,000 crore towards modernisation of our defence equipment will encourage Indian defence industry to make further investment in this important sector with the objective of reducing our dependence on imports which remain as high at 70 per cent," Punj Lloyd Defence President Aditya Vij said.

CII Defence Committee Chairman Gurpal Singh termed the budget as "pretty good" but said a number of demands of Indian defence industry were not granted in the Budget. He hoped the government would accept its demands in the next Budget to provide level-playing field to the private sector defence industry with defence PSUs and foreign manufacturers.