India raised its defence modernisation budget for the next fiscal by 20% to nearly Rs. 80,000 crore on Friday, pushing up the country’s defence spending to Rs. 1,92,407 crore. The biggest chunk of this modernisation kitty—40%—will go towards acquisition and upgradation of air power of the three armed forces.
Laxman Kumar Behera at the Delhi-based Institute for Defence Studies and Analysis said it was good that the government spared money for defence modernisation at a time when the economy was under stress.
Behera, who specialises in defence economics, expects defence modernisation expenditure to consistently rise over the next few years due to big ticket deals on the anvil.
The government had last year signed contracts for upgrading 51 Mirage-2000 combat jets and buying 10 C-17 transport planes. Over the next few months, it is expected to sign the contract for 126 Rafale medium multi-role combat aircraft.
At 2.3% of India’s Gross Domestic Product (GDP), India’s defence spending is less than half of China’s official defence expenditure of $100bn.
Defence analysts say it is unreasonable to expect New Delhi to match Beijing’s deep pockets or its consistent high priority to defence.
With plans to spend over $100bn on defence acquisitions in the next five to 10 years, New Delhi hopes to keep expansion of the non-plan expenditure under check.
The medium-term fiscal policy unveiled by finance minister Pranab Mukherjee said the growth in defence services expenditure on revenue account was projected to reduce from 13.8% in the current fiscal to 8.6% next year and be capped at 7% in 2013-14.