Defence ministry expects 15-20% rise in allocation

The defence ministry is expecting a substantial increase in its budget allocation for the next financial year, 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 expected an increase of 15 to 20% in the budgetary allocation this year from the 2009-10 figure of Rs 105,600 crore.

“Certainly we are expecting an increase because of the increase in revenue expenditure, implementation of Sixth 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 the Assocham International Conference on Indian Defence here.

In the 2009-10 budget, the allocation for the defence ministry saw a 34 per cent increase to Rs 105,600 crore, which is one of the highest in country's history.

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 had been negligence "somewhere in between". "Modernisation has to be an ongoing process. It has been consistent and constant," he said. Earlier addressing the gathering, he said government had the responsibility to look after employees of ordnance factories as it was not proper to leave them in the lurch.