10-12% hike likely in defence outlay

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New Delhi: With the government laying greater emphasis on the security issues, the Budget for 2009-10 is likely to further increase the defence outlay by 10-12% over Rs 1,41,703 crore announced in the interim Budget in February.

According to highly placed sources, “The worsening security situation in the country’s neighbourhood and the gap in the country’s defence preparedness, post Mumbai attacks, there is a heightened need to not only modernise the existing systems with the armed forces, but also to procure more equipment. The shopping list of the services includes virtually all types of weapons and systems, including big-guns, fighter aircrafts, armoured vehicles, radars, missiles, naval vessels, fast interceptor craft, and patrol boats for the coast guard.”

In the near term, there is some hope for fast-track purchases of smaller items, including fast interceptor craft, hovercrafts and patrol boats for the coast guard. The government also will finalise major deals in the next two to three months, a senior defence ministry official said.

According to the interim Budget presented by acting finance minister Pranab Mukherjee on February 16, Rs 1,41,703 crore was allocated for the country’s defence services that include three armed forces (the Army, the Navy and the Air Force), and other departments, mainly Defence Research and Development Organisation (DRDO) and the ordnance factories. This was apart from Rs 24,960 crore which have been earmarked to clear civil expenditures of ministry of defence (MoD) and its affiliated organisations, including, the coast guard, and for defence pension (Rs 21,790 crores).

To put it simply so far, the total resource available for the MoD and its various establishments is Rs 1,66,663 crore.

“Though the defence Budget 2009-10 announced in Feburary registered a growth of over 34%, much of the growth is accounted for by the increase in revenue expenditure, which, in turn, has been inflated by the hike in pay and allowances necessitated by the implementation of the recommendations of the Sixth Pay Commission,” observe experts.

Under the interim Budget, almost 80% of the capital budget was available for procurement of weapons and systems, including some new ones, sources pointed out that the defence establishment would be under pressure to spend the resources in a time-bound manner. However, in the recent past shows that under-utilisation of capital budget has increased with each year’s allocations.