New Delhi, February 28
India today gave clear indications regarding its security concerns by bringing about a hefty hike of almost 14 per cent in its allocation for defence over last year’s revised estimates in the annual budget presented by the Finance Minister, Mr Yashwant Sinha, here today.

Although the hike in the allocation was nowhere near the all-time high of 30 per cent last year, which was more as a result of the war which India fought with Pakistan in Kargil in 1999, the 13.84 per cent increase was more than that the country has seen in the recent years.

It gave clear indications that the government’s stress was again on the modernisation of the armed forces, specially as there has been an increase in the allocation for acquisition of equipment by the three Services. The armed forces have been demanding acquisition of more equipment to fill the gaps in the country’s defence structure.

The budgetary allocation this year has been hiked by more than Rs 7,500 crore over the revised estimates of Rs 54,461 crore last year. This amounts to about 2.6 per cent of the GDP which in line with the initiative taken last year when the allocation was about 2.5 per cent of the GDP.

The allocation this year is also among the highest in terms of the GDP in the recent years. Despite not having any pressing event like the Kargil war which forced the whopping increase last year, the government by increasing the allocation has only shown its determination to carry on within proving the country’s defence, including its weapony.

Incidentally, last year was the first time in the past decade that the defence allocation touched the level of 2.5 per cent of the GDP after a steady decline over the years. In 1999 the allocation was just about 2.33 per cent of the GDP. In real terms, the Defence Budget had been hiked by Rs 13,000 crore last year.

However the Budget this year has pointed out that the expenditure on defence last year was not as much as had been allocated by the Finance Minister. Against the allocation of Rs 58,581 crore there was an expenditure of just about Rs 54,461 crore, which left a surplus of Rs 4,126 crore.

The allocation this year, despite keeping in mind the rising inflation and the foreign exchange rates could bring about some hike in the Defence Budget in real terms also. Incidentally as in the past there is again an assurance of a further “need-based” budgetary support during the year.

The major increase in outlay has been for acquisition of aircraft and aero-engines, besides other equipment, including that for the surveillance along the borders. The Air Force has got a major share of finances, presumably in view of the agreement between India and Russia over the supply of Sukhoi multi-role frontline fighters.

The IAF is also negotiating to purchase the AJTs from Britain. The British Hawk has been shortlisted and the total deal could well be over Rs 600 crore.

Similarly, the fund allocation has been hiked almost four times for the ordnance factories from a meagre Rs 262 crore to over Rs 1,032 crore.

The Army, as usual, has got a major share of the Defence Budget with a 8.64 per cent hike to Rs 31,773.16 crore. This a jump of Rs 2,527.84 crore over the last year’s revised allocation of Rs 29,245.32 crore.

The Navy and the IAF have seen a marginal increase in allocation of Rs 4,331.51 crore and Rs 7,923.92 crore, respectively. The defence capital outlay for the year has seen a sharp increase of Rs 5,179.82 crore to Rs 19,958.52 crore over the revised estimates for the year 2000-01. This is another indication that some more major weaponary acquisition could be in the pipeline after the recet signing of the T-90 tanks deal with Russia.

The increase of Rs 2,479.34 crore in the Army’s Budget is mainly to meet the burgeoning pay and other allowances of the personnel, besides stores.

Pension and other retirement benefits for the three services would cost the exchequer a whopping Rs 10,769.60 crore. This also includes a small amount of Rs 5.05 crore for various gallantry awards to defence personnel in recognition of their services.

No major housing scheme has been announced for the three services and an amount of Rs 24.3 crore will be spared mainly for repairs and maintenance of office buildings and construction of a few offices.

Describing this year’s budget as the best in 50 years, the Defence Minister, Mr George Fernandes, said he was satisfied with the allocation.

“It will help us keep up the face of weaponary upgradation and modernisation drives in the armed forces,” he said.

A major feature of this year’s defence expenditure is the sharp drop of almost Rs 500 crore in the allocation for defence ordnance factories, indicating that most of these units are breaking even by boosting sales.