Defence Min expects 15-20% rise in Budget allocation

Defence Ministry is expecting a 15 to 20 per cent increase in its Budget allocation for the next fiscal due to rise in expenditure on its modernisation drive and commitments following pay review.

Minister of State for Defence M M Pallam Raju said he expects an increase in the budgetary allocation this fiscal from 2009-10 figure of Rs 1,41,703 crore.

"Certainly we are expecting an increase because of the increase in revenue expenditure, implementation of 6th Pay Commission Report. Apart from that, there is an emphasis on modernisation and new acquisitions," he said.

Keeping this in mind, Raju said, the Ministry expects an increase in the Budget, which "might be 10-15 per cent or 15-20 per cent".

"I am hopeful of an increase of at least 15-20 per cent," he told reporters on the sidelines of Assocham International Conference on Indian Defence here.

In the 2009-10 Budget, the allocation for Defence Ministry saw a 34 per cent increase from Rs 1,05,600 crore which is one of the highest in country's history. The planned expenditure had been pegged at Rs 86, 879 crore in this fiscal.

Asked whether there was any plan to increase the 26 per cent cap on FDI in defence sector, Raju said at the moment, the government was not thinking on this line though there is a request from the industry.

"We are not considering it (increasing the FDI cap) at this moment," Raju said.

Refusing to give any time-frame for increasing the FDI cap in defence sector, he said, "We will see if there is a need in the future. The government in its wisdom has now restricted it to 26 per cent."

On privatisation of ordnance factories, he said there is "no thought" in the government on this line. However, Raju emphasised on the need for modernising the ordnance factories, shipyards and other Defence PSUs with an objective to attain greater quality.

He admitted that at some point of time, there has been negligence "somewhere in between". "Modernisation has to be an ongoing process. It has be consistent and constant," he said.

Earlier addressing the gathering, he said government has the responsibility to look after employees of ordnance factories as it was not proper to leave them in the lurch.

However, the Minister was of the view that there was a failure in modernising the ordnance factories as they did not pump in money for research and development.

"This gives an opportunity for private sector. They can bring in Gen-Next technology".

Raju appealed to the private sector to contribute to the development of the defence sector in the country. He said there was a need for greater synergy between public and private sectors.

"We are sort of looking to utlise the capabilities of the private sector. Public sector alone will not alone be considered for the development of sector," he said.

However, Raju cautioned that in certain areas private sector cannot be allowed as the government likes "certain areas to be protected".

Raju said the Ministry was also working on a policy on defence production.

"We have initiated the process for optimally harness the potential in this area. We will be consulting all the stake holders in this regard," he said.

The Minister said efforts are being made to attract scientists and experts to the defence sector. "We are restructuring the DRDO."