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The government on Friday allocated Rs 1,47,344 crore (Rs 1,473.44 billion) towards defence in 2010-11 Budget, a paltry 4 per cent increase from last year's Rs 1,41,703 crore (Rs 1,417.03 billion).
Of the allocation provided, Rs 60,000 crore (Rs 600 billion) would go for capital expenditure, Finance Minister Pranab Mukherjee said presenting the Budget for 2010-11 in the Lok Sabha.
The four per cent increase in real terms would amount to only Rs 5,641 crore (Rs 56.41 billion).
Last year, the government had provided a steep hike of about 34 per cent for the defence working out to an increase of Rs 36,103 crore (Rs 361.03 billion).
Mukherjee, however, said considering the importance of defence of the country, more funds would be provided on the basis of requirements in the future.
The defence allocation continues to hover over 2.5 per cent of the gross domestic product, though there have been suggestions to increase it substantially in view of the prevailing security situation.
The allocation, however, matches global average of 2.5 per cent defence expenditure by all nations put together.
India's $30 billion defence expenditure is the 10th largest spending by any country on its external security and is only 2.1 per cent of the world's total defence expenses that has touched $1,500 billion.
According to international institute SIPRI's data, US ranks the top defence spender at over $600 billion with China coming a distant second with $90 billion.
While China's official figures puts its defence spending at $70 billion (1.4 per cent of gross domestic product), Pakistan is said to be allocating $8 billion (4.5 per cent of GDP) for its armed forces.
Interestingly, the defence ministry has returned Rs 5,539 crore (Rs 55.39 billion) this year as unspent money, whereas it had returned over Rs 7,000 crore (Rs 70 billion)last year.
The non-plan expenditure of defence ministry this year has been pegged at Rs 87,344 crore (Rs 873.44 billion) revenue expenditure, a decrease of Rs 1,096 crore (Rs 10.96 billion) compared to last year's higher revised allocation of Rs 88,440 crore (Rs 884.4 billion) for handing out sixth pay commission arrears to its employees.
It will also include the Rs 60,000 crore (Rs 600 billion) for capital expenditure, which is an increase of Rs 12,176 crore (Rs 121.76 billion) over last year's revised estimates of Rs 47,824 crore (Rs 478.24 billion).
Among the procurements awaited included 126 combat aircraft worth $10 billion likely to be finalised by 2011, armed and transport helicopters for the IAF; second line of submarines, naval fighters, patrol aircraft and helicopters for the Navy; and artillery guns and tanks for the Army.