In a clear signal that there would be no let up in the ongoing mammoth modernisation drive of the armed forces, Finance Minister P Chidabaram said that the defence allocation for the coming year would be Rs 1,05,600 crore, a hike of ten per cent from last year's allocation of Rs 96,000 crore.
But in actual terms, the hike is 14.16 per cent as that of last year as the Defence Ministry could only spend Rs 92,500 crore, leaving a sum of Rs 3,500 crore unspent, apparently due to two major contracts for purchase of helicopters and 155 MM artillery guns not going through.
It was amply clear that the budget will focus on continuing upgradation of armaments with the allocation on capital outlay running into Rs 48,007 crore, a jack up of almost 23.3 per cent over last year's outlay of Rs 37,705 crore.
Capital estimates last year were Rs 41,922 crore of which the Defence Ministry only spent Rs 37,705 crore.
Though there was substantial hike in defence budget, India's defence spending continued to be below two per cent of the GDP far less as compared to Pakistan's 5 per cent and China's almost 7 per cent.