Sinha hikes defence Budget to Rs 650 bn

With the country's armed forces in a state of high alert on the Indo-Pak border, the government on Thursday substantially hiked the country's defence Budget to Rs 650 billion for 2002-2003 as compared to last year's revised estimates of Rs 570 billion.

To meet the whopping costs of operations of armed forces, now mobilised on the borders with Pakistan for more than two months, Finance Minister Yashwant Sinha also imposed an across the board 5 five per cent surcharge on all categories of tax payers saying that national security was an "overriding concern. Its cost has to be shared by all of us".

Declaring modernisation and upgradation of the country's defence preparedness as an area of "highest national priority", Sinha asserted in the Lok Sabha while presenting the Union Budget that "in case of need, he would not hestitate to provide more funds".

Though the finance minister did not agree to defence ministry's reported proposal for a two year roll over particularly on defence capital outlay, he assured that his ministry would not be starved of funds in case of needs to meet costs of some key defence acquisitions delayed due to prolonged negotiations.

Though the hike as compared to last year's budget estimates was only a modest Rs 30 billion, the hike turns substantial keeping in view the defence ministry having to surrender almost Rs 50 billion.

By going for such a hike in defence expenditure, the government has indicated that the defence ministry could proceed with major defence purchases already in the pipeline including the induction of Mounted 155mm guns, Awacs as well as Hawk AJT for the IAF, which reportedly had been finalised.

Other major acquisition awaiting the nod include advanced American sensors for detecting intrusion of militants from across the line of control in Jammu and Kashmir as well as sorely needed US' weapon locating radars for the Artillery.

Though the Defence Minister George Fernandes had recently indicated that his ministry was yet to spend as much as a whopping Rs 140 billion, the revised estimates for the ministry indicated that only a sum of Rs 50 billion was unutilised indicating that the ministry could have tied up some key deals like the Rs 50 billion Hawk AJT deal.

The bulk of the defence Budget has been earmarked on the capital outlay, which has been hiked by more than 30 per cent to Rs 214.11 billion from last year's revised estimates of Rs 16,9.57 billion.

The estimates clearly bear out that all the three services--Army, Navy and the Airforce as well as the ordnance factories have not been able to fully utilise the funds.

In case of Army, the shortfall in spending is as much as Rs 20 billion, with the Army spending only Rs 296.13 billion as against the allocation of Rs 311.03 billion.

However, the government has still gone ahead to raise the current outlay for the Army to Rs 306.91 billion (including the rollover of last year's unspent amount).

Similarly, the unutilised expenditure by the Navy was to the tune of about 8 per cent with the service only spending Rs 38.63 billion as against an allocation of Rs 42.58 billion.

Apparently keeping in mind, the likely naval weaponry inductions like French Scorpene, and Russian Amur killer class submarines and leasing of nuclear subs and long range strategic bombers, the government has hiked the naval outlay by over 15 per cent to Rs 45.54 billion from last year's revised figures of Rs 38.63 billion.

Like its twin services, the Air Force too has fallen short in its spendings to the tune of almost Rs 7 billion. But the government has given IAF a jump in outlay to the tune of over Rs 10 billion (including unspent amount of Rs 7 billion of last year), taking the next fiscal year's figure to Rs 81.87 billion as compared to last year's revised estimate of Rs 70.16 billion.

As far as spendings in the Ordnance factories are concerned, the government in a sharp departure has only allocated a modest Rs 1.58 billion as compared to last year's revised estimates of Rs 4.49 billion.

With the government already announcing allowing 26 per cent equity participation in the defence field by the private sector including FDI, the marginal allocation comes as no surprise. The Ordnance factories board also failed to utilize as much as over Rs 6 billion in the current fiscal year.

PTI

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