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Budget may provide modest boost to defence spending

Budget may provide modest boost to defence spending
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First Published: Wed, Feb 27 2008. 01 44 PM IST
Updated: Wed, Feb 27 2008. 01 44 PM IST
New Delhi: India’s defence spending is likely to rise by 8-10% in this year’s budget, not enough to please the armed forces, but enough for a gradual modernization of the world’s fourth-largest military, officials and analysts said.
India is emerging as one of the world’s biggest arms buyers, and is planning one of its biggest ever arms purchases, a $10 billion (Rs40,000 crore ) deal to buy 126 fighter jets. US Defense Secretary Robert Gates is in India this week trying to push American bids for that deal.
But a painfully slow bureaucratic process means arms purchases will be gradual, not sudden.
Spending plans will also be tempered this year with the government expected to present a budget on Friday with more money allocated for job creation schemes and healthcare ahead of elections due by next April.
“We expect the defence allocation to be in line with inflation and will not be surprised if it is lower than 10%,” a senior defence official told Reuters on Wednesday.
Consumer price inflation ran at 5.51% in 2007.
“The government seems set to present a people’s budget, but we expect it to continue the process of acquiring new weapons systems,” he said.
India raised its defence budget by 7.8% to $22 billion for the year ending March 2008 as part of plans to modernise its 1.3-million-strong military.
But it failed to spend around 70% of its $10 billion allocation for capital outlay because of red tape.
“What worries me is like all previous years we are unable to utilize the capital funds, as everyone is taking time in making decisions, which is not good enough,” said Ashok Mehta, a retired army general.
Ever since a bribery scandal over the purchase of artillery from Swedish arms makers Bofors AB in 1986 seriously undermined the government of Rajiv Gandhi, defence ministry bureaucrats have been very cautious about signing arms deals.
At least 38 court cases relating to arms agreements are still pending against bureaucrats and military officers, records show.
“The government is afraid of scams and more cases, so arms procurement will remain very slow,” Mehta said.
India spends around less than 2.5% of its gross domestic product (GDP) on its military, a smaller percentage than is believed spent by rivals China and Pakistan.
Military experts say this is not enough.
“Although there has been a critical need to augment inventory, modernization efforts have not been sustained and over the last 15 years we are trying to redress past physical inadequacies,” said C. Uday Bhaskar, former director of New Delhi’s Institute for Defence Studies and Analyses.
“We are falling short of the required budgetary support which does not augur well at all.”
In the past year, India has cleared a few pending arms deals, buying 347 T-90s tanks from Russia and six C-130J military transport planes from the US firm Lockheed Martin.
It also inducted eight British advanced jet trainers into its air force, almost 27 years after it began negotiating the deal.
Looking ahead, it plans to spend $30 billion on imports over the next four years to modernize its largely Soviet-era arms.
Even if it does not meet that target, it could still be the largest defence market in Asia, business leaders say.
To overhaul its inventory of ageing fighter aircraft, it wants to buy the 126 new multi-role jets, with the $10 billion outlay likely to be spread over several years.
It also wants to arm its navy with long-range maritime reconnaissance aircraft and add more missiles and artillery to its army.
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First Published: Wed, Feb 27 2008. 01 44 PM IST