Finance minister P Chidambaram on Monday announced that the defence budget for 2014-15 had been hiked from Rs. 203,672 crore to Rs. 224, 000 crore, a 10% increase over last fiscal’s outlay.
However, the meagre increase in the capital expenditure could hit the modernisation plans of the armed forces.
The capital outlay has been increased from Rs. 86,740 crore to Rs. 89,587 crore in the interim budget for 2014-15, a hike of barely 3.2%.
But it hardly comes as a surprise as Prime Minister Manmohan Singh had indicated last November the country may be forced to cut down military spending due to the current economic slowdown.
He had then advised military commanders to exercise prudence in defence acquisitions and “cut our coat according to our cloth.”
The low hike in capital expenditure could derail some key modernisation plans, at a time when the military is planning to scale up its capabilities with new fighter planes, submarines, artillery guns and land-based strike formations.
China’s official, but underreported, defence budget for 2013-14 stands at Rs. 594,000 crore.
India is years behind the Chinese military with the neighbour currently outnumbering the country’s combat power by a 3:1 ratio. India’s hopes to bridge the gap in the next 15 years hinge on availability of funds.