The dire predictions of the defence minister forecasting major cuts in the defence budget did not materialise, sweeping a wave of relief through the defence establishment.
The defence budget 2013-14 with a proposed outlay of Rs. 2,03,672 crores saw a modest increase of approximately 4.5% over last year. The finance minister's allotment of Rs. 86,740.71 crores in capital acquisition budget has increased from Rs. 69,578 crores.
Interestingly, the defence budget had grown by 17% in 2011-12 and 12% in 2012-13. A mere 1.79% of the GDP, it is a far cry from the stated goal of spending 3% of GDP on defence backed by the Parliamentary Committee on Defence.
Moreover, in the context of an increasingly assertive China, the budget will only widen the gap with India as it tries to cope with the Chinese military modernisation programme. Beijing's military expenditure in real terms has grown by 620% between 1990 and 2011, while by contrast, India's has grown by 152%.
Consequently, the gap between the two countries' military spending which was almost negligible in 1990 has been widened by a factor of three in favour of Beijing.
India has been the largest importer of arms but the meagre increase may hamper such deals. The 'mother of all deals,' the MMRCA (Medium Multi-Role Combat Aircraft) tender for French Rafale aircraft of Dassault worth nearly $15-17billion is likely to be staggered despite negotiations almost reaching completion.
In this context, it is wise to remember that the plan to modernise the Indian military was put on hold during the 1990s which proved disastrous subsequently. It was only in the later part of the 2000s that the renewed focus on modernisation helped the military to regain its operational punch after considerable effort.