NEW BUDGET 2012 FOR DEFENCE

Defence budget shoots up 17%

MOST OF TODAY’S PAY AND ALLOWANCES CONSTITUTE TOMORROW’S DEFENCE PENSIONS

Military spending has gone up by 17 per cent, or Rs 28,992 crore, to Rs 1,93,407 crore in the Budget. Finance Minister Pranab Mukherjee said this allocation was based on the needs projected by the defence ministry.

For 2011-12, the spend was pegged at Rs 1,64,415 crore, an increase of 11 per cent over the previous year. However the three services together returned around Rs 3,000 crore of unspent money. The difference between the Budget Estimate for 2011-12 and the Revised Estimate for the same year was around Rs 3,000 crore.

The capital expenditure of the armed forces — which goes into the purchase of equipment — was set at Rs 79,579 crore, a 15.7 per cent increase from last year’s capital allocation of Rs 69,199 crore. As much as 70 per cent of this amount will go into servicing contracts already signed.

The revenue component of the defence budget amounts to Rs 108,369 crore. This part of the Budget, that goes into paying salaries, was Rs 90,767 crore in the Budget Estimate, but was Rs 99,762 in the Revised Estimate.

Commenting on the ballooning revenue under the defence budget, Laxman Behera, research fellow at the Institute of Defence Studies and Analyses, said, “Pay and allowances are obligatory in nature and the government has little control over their growth, given the mandatory annual increases. Moreover, MOST OF TODAY’S PAY AND ALLOWANCES CONSTITUTE TOMORROW’S DEFENCE PENSIONS — again something over which the government has little control. The growth in these two components has implications for other aspects of the defence budget.”

On the capital side, India is on the verge of signing a $20-billion contract for 126 Rafale medium multirole combat aircraft, apart from a $600-million deal for 75 Pilatus PC-7 basic trainer for Air Force. However, the outlays indicate that the final go-ahead for this expenditure might be rolled over to the next financial year.

The Air Force, which is buying the Rafale, was allotted Rs 22,000 crore in 2011-12; the revised estimates shows it has spent just about Rs 18,000 crore. The outlay for 2012-13 is Rs 23,000 crore.

Several artillery purchases for the army are also due; for instance, the proposal to buy 145 ultra-light Howitzers from the US under a government-to-government sale.

-via Business Standard