8.9% outlay hike for upgrade

The Forces now have ample funds to shop for new weaponry.

The modernisation programmes that have been kick-started by the armed forces are set to continue, as the defence budget for 2006-07 has been hiked by 8.9 per cent (Rs 7,300 crore) to Rs 89,000, as against Rs 81,700 crore in 2005-06.

On expected lines, the Budget said this hike is meant to cater to "normal growth in pay, allowances, maintenance and for modernisation of the defence forces".

Unlike the previous year, the three services did not spend all the money, but returned about Rs 1,300 crore from the capital outlay. The capital outlay for 2006-07 is Rs 37,458 crore, up 13.25 per cent from the revised expenditure of last year, and constitutes a little over 42 per cent per cent of the total defence budget.

The increase of Rs 4,383 crore in arms acquisition funding implies that the defence ministry has a considerable sum in its hands to place orders for new equipment and also meet the commitments for orders placed by the previous and present governments.

This will help the kick-start the process of payments both for the aircraft carrier that India plans to build and the compliment of aircraft from Russia, submarines from France and advance jet trainers from Britain.

It will also help the Air Force call for international tenders to purchase 126 combat aircraft to shore up its depleting fighter squadron strength and enable the army to purchase upgraded 155 mm artillery guns.

Despite its failures to meet the deadlines on the main battle tank and indigenous aero engines, the Defence Research and Development Organisation (DRDO) has been given a 7.48 per cent hike in allocation to Rs 3,020.18 crore, from last year's revised estimate of Rs 2,809.96 crore.

The allocation for the Army has been increased by 5.28 per cent to Rs 33,205 crore from last year's revised estimates of Rs 31,539 crores, while that of the the Air Force has been hiked by 7.88 per cent to Rs 10,087.36 crore from Rs 737.09 crore in 2005-06. The Navy, the smallest of the three services, has got a hike of 5.75 per cent, as the allocation been increased to Rs 6,791 crore, compared to last year's estimate of Rs 6,422 crore.

The revenue expenditure has been increased by 6 per cent to Rs 51,542 crore, from Rs 48,625 crore in 2005-06. This is in line with the Army's demand that the revenue outlay must be not be downsized until the security situation stabilises to acceptable levels.

While the prime minister recently said that country's defence budget could be at 3 per cent of GDP, the current budget is only 2.27 per cent of GDP, despite an 8.9 per cent hike. India's neighbours, China and Pakistan, allocate 5-7 per cent of their GDP for their armed forces.

The government has also fulfiled the long-standing need of retired Armed Forces Personnel Below Officer Rank (PBOR) personnel for better pension benefits. About 12 lakh PBOR personnel have benefited to the tune of Rs 460 crore with effect from January 1, 2006.