Defence outlay up by 34 pc

The capital outlay for defence -- meant for hardware procurement -- has been hiked to Rs 54,824 crores from last year's revised estimate of Rs 41,000 crore.

    This, by and in itself, suggests that the government will spend a great deal more on preparations for conventional warfare against nations like Pakistan and China.

The substantial outlay -- Rs 1,41,703 crores which is the same as that pegged in February's interim budget -- indicates the possibility of successful closing of negotiations like purchasing aircraft carrier Admiral Gorshkov at a higher price, buying three more Russian stealth frigates or leasing two nuclear-powered submarines from Russia.  The total Defence outlay for the 2008-09 budgetary estimate was Rs 1,05,600 crores.

 This is to say that there has been a jump of almost Rs 36,000 crores this time.

In his Budget speech, Union Finance Minister Pranab Mukherjee did not touch the interim defence budget he presented in Parliament in February at all, except addressing the long-pending one-rank-one-pension issue.

Of the total Defence budget, the operating expenditure of the three services and other departments has been pegged at Rs.86,879 crore. As in past years, the 1.1 million strong Indian Army has received the lion’s share of 41 percent, with the Indian Navy being allocated Rs.8,322 crore and the Indian Air Force (IAF) Rs.14,318 crore, with an additional Rs 300 crores for procurement.

The capital outlay for ordnance factories has been increased by Rs 500 crore. The Army has received an increase of Rs 4,852.65 crores in its capital outlay under the head of ‘’other equipment’’, possibly for purchasing heavy machinery. An additional Rs 619.33 crore was allocated to the Army for procuring helicopters.

Of the two heads, the operating expenditure has been increased — in comparison to the last hike of less than 7 per cent — by a whopping 50.85 per cent or Rs.29,286 crore largely due rise in salaries and allowances for armed forces personnel. At the same time, capital expenditure has declined 14.20 per cent or by Rs.6,817 crore.

Of its allocation, the Army will spend a staggering Rs.36,081 crore or 64 percent on pay and allowances. For the Navy Rs 2,850 crore or 34 per cent crore has been set aside on this count and for the IAF Rs.4,880 crore or 34 percent.

What remains to be seen is how much of this will actually be spent by the time the fiscal ends March 31, 2010, as the armed forces returned Rs.7,000 crore of the Rs.48,007 allocated for capital expenditure for 2008-09.

Mukherjee had a word of cheer for soldiers and junior commissioned officers (JCOs), saying their pensions would be enhanced. However, the officer cadre, which had led the “one-rank-one-pay” (OROP) demand, has been ignored. The enhanced pensions would annually cost the government Rs.2,100 crore. The Finance Minister said, “the government has decided to substantially improve the pension of pre-January 1, 2006 Defence pensioners below officer rank (PBOR)and bring pre-October 10, 1997 pensioners on par with post-October 10, 1997 pensioners. Both these decisions will be implemented from July 1, 2009, resulting in enhanced pension for more than 12 lakh jawans and JCOs.