New Delhi: Keeping in view the big defence deals in the pipeline, including acquisition of 126 fighter aircrafts, Finance Minister Pranab Mukherjee on Friday increased Defence budget by 13.15 percent to Rs 1, 93,407 crore for the next fiscal.
Presenting the General Budget for the financial year 2012-13 in the Lok Sabha, Pranab Mukherjee announced a hike of Rs 22,500 cr in the defence budget for the coming fiscal. This year’s defence allocation of Rs 1,93,407 includes a capital account expenditure of Rs 79,578.63 cr which is aimed at modernization of armed forces. Last year’s allocation for expenditure on capital account was pegged at Rs.69198.81 crore.

The allocation will be spent on purchase of 126 fighter jets, 197 helicopters and 145 ultra light howitzers artilleries.

The defence allocation in the General Budget for the financial year 2012-13 is about 1.9 per cent of the GDP.

Indian Air force has been allotted maximum funds. IAF has got over Rs.35, 637 crore out of which it is expected to spend Rs.23, 701 crore on the purchase of the new fighter planes.

However, according to Defence experts, it is a matter of concern that the funds allocated for the purpose of modernisation and maintenance of armed forces is not being utilised properly.

“Due to rising inflation, 60 percent of allocated fund is being spent on standing cost of Defence forces, whereas despite rising challenges and needs for modernisation, purchase of military equipments is not picking the pace. Hence amid price rise and inflation, the hike in Defence budget is nominal,” said C Uday Bhaskar, Defence analyst.

China has been for last two decades increasing its defence allocation in double-digit.   hike in its Defence budget. Recently the neighobouring country announced a defence allocation of USD 106 billion whereas India’s defence allocation is below USD USD 40 bn.