[Reader-list] The indian defense budget (fwd)

[Ravi Sundaram]

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Govt to up defence spend by 25-30%

JAYANTHI IYENGAR

Times of India 21-2-02

NEW DELHI: The government is set to increase the defence expenditure by a 
whopping 25-30 per cent to Rs 81,000 crore during 2002-2003.

The government had earlier raised the expenditure from Rs 62,000 crore to 
the present Rs 78,000 crore. The decision was recently taken at a meeting 
chaired by the Prime Minister, along with the defence and finance ministers.

At this meeting, defence minister George Fernandes put forth a demand, 
double of what was anticipated by the finance ministry. Sources said the 
Prime Minister did not want security concerns to be compromised in any 
manner. He therefore, directed the finance ministry to allocate whatever 
was sought by the defence ministry.

Defence expenditure has been growing at not more than 15 per cent annually. 
Hence, doubling up of defence demand for 2002-03 has come as surprise to 
the finance ministry.

In case the defence ministry is actually able to spend the allocated sum, 
India's defence spending during 2002-03 would be higher than 1999-00, when 
Kargil upped the defence allocation for the year to 21 per cent as compared 
to the previous year.

Through the 90s, defence spending has been higher than budgeted, but there 
has been a reversal in the trend since 2000-01, causing concern to defence 
personnel and experts.

As a matter of fact, a defence saving of Rs 4,126 crore in 2000-01 went a 
long way towards helping the finance ministry contain the fiscal deficit. 
Similar savings are expected during the current financial year as well.

As a percentage of GDP, defence allocation in budget 2001-02 works out to 
be 2.5 per cent of the GDP, as against Pakistan's 2.8 per cent and China's 
3 per cent.

It is as yet difficult to estimate what India's defence allocation for 
2002-03 would be as a percentage of the GDP, considering the Xth Plan is 
being prepared assuming an 8 per cent GDP growth.

However, considering that there are few signs yet of India moving into such 
a high growth trajectory in 2002-03, which is the first year of the X Plan, 
one would not be wrong in assuming that defence allocation as a percentage 
of the GDP in 2002-03 would be higher than what is being estimated for 
2001-02.

Since the mini-war in Kargil in 1999, the armed forces have been demanding 
an escalation in the arms spend, equal to India's neighbours. The demand 
was made in the wake of defence expenditure falling steadily from 3.4 per 
cent of the GDP in 1987 to 2.5 per cent last year.

The consensus post-Kargil has been that defence capability is on the 
decline because of a budgetary squeeze over the last a decade and a half.

The finance ministry has been more than willing to make the necessary 
allocation