Saturday, February 27, 2010

India Announces Defense Budget


Aerospace Daily & Defense Report Mar 01 , 2010 , p. 14
Neelam Mathews

NEW DELHI — India’s defense expenditure has been raised four percent to $31.8 billion for 2010-11.

The budget was presented by Finance Minister Pranab Mukherjee Feb. 26 in parliament. Last year, the government provided a steep hike of about 34 percent for defense.

Mukherjee said that considering the importance of defense, more funds would be provided as requirements dictate. “Secure borders and security of life and property fosters development,” he said. “I propose to increase the allocation for defense. Needless to say, any additional requirement for the security of the nation will be provided for.”

At the recent land and naval DefExpo 2010 show, Defense Minister A.K. Antony said that India’s defense expenditure, which is 2.5 percent of its gross domestic product (GDP), would be increased. This latest allocation continues to be around 2.5 percent of the GDP. Three years ago, the defense budget was at $20.11 billion, or less than 2.5 percent of India’s GDP.

In keeping with past tradition, the 1.2 million-strong Indian army gets the largest share of the budget, followed by the air force and navy. Allocation for defense ordnance factories has been slashed. The Defense Research and Development Organization (DRDO) gets a hike from the previous fiscal year.

However, there isn’t much celebration among industry, as the government’s track record shows that the ministry of defense never ends up using the entire budget, mainly due to delays in procurement decisions that get caught up in red tape.

India’s prime corporate body, the Confederation of Indian Industry, said numerous demands to facilitate growth of the defense manufacturing industry and provide a level playing field were not considered in the budget.

Meanwhile, Pakistan’s defense budget is set to increase in June up to 5.1 percent of GDP, according to media reports.

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