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India Hikes Defense Budget

: Feb 26, 2014 - : 12:55 am

India’s military procurement plans are likely to be hampered with a minimal raise in budget allocation for acquisitions in the next financial year.
Though India has proposed to increase its defense spending by 10% to 2.24 trillion rupees ($36.2 billion) in the financial year 2014-15, the capital allocation earmarked to buy new arms and weapons systems has been increased only by a paltry 3.2% or 28.47 billion rupees to  895.87 billion rupees. The remaining 1.34 trillion rupees will go toward payment of salaries and other expenses of the armed forces.
While the Indian air force has got the major chunk of the capital allocation with 162.71 billion rupees, that is just $2.6 billion; the navy received 128.56 billion rupees and the army had to be satisfied with a mere 23.57 billion rupees.
With a weakening rupee, the defense budget in dollar terms for new weapon systems has actually fallen from last year’s allocation of $16 billion to $14.49 billion.  Since India is over 70% reliant on imports, the weakening rupee will also affect the defense purchases.
Defense analysts feel that  they don’t see the budget allocation for the major procurement plans that have been deferred from the current financial year, including the multi-billion dollar medium-multi role combat aircraft (MMRCA).   “This meager allocation may adversely impact the purchase of several major weapon systems including transport and attack helicopters for the air force, submarines for the navy and artillery for the army,” says a senior official at the defense ministry.
India has already shortlisted 22 Apache helos, 15 Chinook heavy-lift helicopters and the 126 Rafale combat aircraft for the air force. The defense ministry is also in advance stage of negotiations for a Fifth Generation Fighter Aircraft (FGFA) program with Russia, on which it is expected to spend around 1 trillion rupees in the next 10-15 years. The navy is also in the process of issuing a tender for procuring six large conventional diesel electric submarines, worth approximately 600 billion rupees .
The defense ministry has been seeking additional funds of  400 billion since last year, but that request has been turned down by the finance ministry in view of the economic slowdown.
Several big tickets buys, scheduled during the current fiscal year, have been storiesponed. The much-awaited purchase of 126 MMRCA French firm Dassault Aviation has been put off as the government has no money for any new buys this year.
“We have already spent 92% of our capital budget for 2013-14 fiscal and there is no money this year for new projects. Major procurements are humanly possible only in [the] next financial year,” Defense Minister A. K. Antony said recently.
Defense Ministry officials fear that the cost of the MMRCA program may have gone up following the rise in rupee-to-dollar rates, going from an initial estimate of $10.6 billion all the way up to $25 billion.
In marked contrast to India’s regrettable declining defense budget expenditures, there is a surging increase in China’s defense budget.
“China ‘s defense budget is assessed to touch $148 billion in 2014, second only to the United States defense budget and outstripping the combined defense budgets of Germany, France and the United Kingdom,” writes defense analyst Dr Subhash Kapila.
China’s increase in its defense budgets is focused on expansion of  the Chinese navy and the combat power of the Chinese air force along with China’s force projection capabilities, Dr. Kapila says.
“Further increases in China’s defence budgets can be expected to be earmarked for significant increases in China’s maritime power in terms of upgradation of it submarine fleet, surface combatants and additional aircraft carriers. China’s missiles arsenal can also be expected to be increased and so also its nuclear arsenal,” the analyst says.
In comparison to India’s budget, Pakistan recently jacked up its defense spending by 15% for the current fiscal year, raising it to 627.2 billion rupees from a previous 545.3 billion rupees, citing the ongoing war on terrorism.

 

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