Lowest Defence Budget increase in over 30 years
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India will spend its lowest on defence expenditure in over three decades with several major modernisation projects set to be affected after the Union government proposed a modest hike in the annual Budget that amounts to just over 5 per cent over the last year.
As the government scrambles to cut costs given the dismal growth rate, defence spending is one of the hardest hit with the projected Budget of Rs 2.03 lakh crore coming up to barely 1.79 per cent of the Gross Domestic Product. This is a record low for India in at least three decades, with the figure dropping considerably from 3.16 per cent of the GDP in 1987.
The expenditure Budget has also revealed that the Defence Ministry suffered a Budget cut of over Rs 14,000 crore last year, a majority of which — over Rs 10,000 crore — had been marked for procurement of new defence systems.
While Finance Minister P Chidambaram promised that extra funds will be made available for the defence of the nation if the need arises, the amount allocated for purchase of new equipment is marked as Rs 86,740 crore, an 8.2 per cent hike from last year.
Modernisation of the naval fleet is set to be the hardest hit, with a cut of over 13 per cent from what was allocated last year, throwing questions on several acquisitions, including new generation conventional submarines.
The modest hike is likely to hit the acquisition of air systems hard, given the large number of aircraft purchase proposals that have been floated by all three forces and the minimal hike proposed under this subhead in the Budget. The biggest being the multi-billion dollar contract to procure 126 new fighter aircraft for which French fighter Rafale has been shortlisted.