Describing this low level of funding as totally insufficient to meet crucial requirements including modernisation of the armed forces, the committee said the 14.13 per cent increase in the defence budget was just about enough to meet the outflow of the Fifth Pay Commission recommendations, that have been estimated at 10 per cent of the budget estimates and the general inflation of about six per cent.

Rupee devaluation had further eroded budget capacity. Thus in real terms the provision for items other than salaries and allowances had remained static, if not reduced.

In terms of percentage of GDP also the defencebudget has been stagnating at 2.4 per cent over the last decade. "Keeping in view the current security environment in the region, the committee feels that as reflected by the budget allocations the defence of the country is yet to receive the due priority it deserves from the government".

According to the report it was felt that for optimum utilisation of budget allocations and to avoid time and cost overruns both in acquisition of equipment as well as in manufacturing and research projects, it was of utmost importance that a mechanism was evolved for taking quick decisions in such matters.

"The need for reform in procedure has become more critical in the present scenario when restrictions have been imposed on acquiring latest technology and equipment from abroad," the committee has pointed out.

The ministry of defence had recommended a total provision of Rs 43721.25 crore for 1998-99 after detailed consultations.The ministry of finance, however, allocated 41,200 crore.

The committee has suggestedthat in order to increase the productivity in the ordnance factories, steps should be taken for the modernisation of the equipment, production process and management structure. For this a large amount of allocation on renewals/replacements and on the capital account has to be made in the coming years.

Also, the government should make substantial investment in semi-conductor research, notwithstanding the high initial cost, to be self-reliant in this vital field of defence technology which would have spinoffs for the civil sector as well.

The government should examine the feasibility of quick disposal of old equipment having high maintenance expenditure and switching over to latest ones with low maintenance expenditure, in a time-bound manner as a measure to achieve the twin objectives of technological upgradation of ordnance factories.

The committee also advised the ministry to accord utmost priority to the programme of modernising the MiG fleet as it was essential to maintain the operationalpreparedness and combat worthiness of the ageing Indian Air Force (IAF) fleet.

It has been pointed out that all necessary steps be taken to overcome hurdles in the acquisition of remaining Sukhoi-30 aircraft in order to strengthen the IAF to counter any potential threat to the security of the country.

The committee has noted that the recent series of nuclear tests by India and Pakistan had finally unveiled their nuclear status. As a consequence, the global nuclear order and the security paradigm within the subcontinent had been radically transformed.