India Hikes Defence Spending by 13 Percent

New Delhi: India raised its military spending to 1,93,407 crore ($38.6 billion/1.93 trillion), a 13 percent increase, to further push the fast-paced modernization of its armed forces. The budget hike, in real terms, amounts to 22,471 crore ($4.5 billion) over the revised estimates of 1,70,937 crore for the fiscal ending March 31. Discounting this increase of 6,522 crore (over $1 billion), the hike comes to 17.6 percent over the 1,64,415 crore ($32.8 billion) originally allocated. "As always, this allocation is based on the present needs. Any further needs for security of the nation will be met," Finance Minister, Pranab Mukherjee, said while presenting the budget in the Lok Sabha. Mukherjee said 79,579 crore ($15.9 billion) had been set aside for capital expenditure - purchasing military hardware. This is a 15.7 percent hike over last year's allocation of 69,199 crore ($13.8 billion). The over 13 percent raise is marginally higher than the 11 percent hike in the budget for 2011-12. "In the present situation, this is the best budget," Defence Minister, A.K. Antony, told reporters here later. China had 10 days ago hiked its defence budget by 11.2 per cent to $106.4 billion, pushing its military spending into triple digit figures for the first time. In June last year, Pakistan had projected a defence outlay of $5.75 billion for 2011-12, a raise of 12 percent. The US is the world's largest military spender at close to $750 billion. The $15.9 billion allocated for capital expenditure will go towards the procurement of new weapons and systems and towards meeting committed liabilities in the form of payments for contracts already signed in previous years. India is on the verge of signing a whopping $20 billion contract for 126 Rafale medium multi-role combat aircraft, apart from a $400 million deal for 75 Pilatus PC-7 basic trainer for its air force. It has already signed contracts for 10 C-17 transport planes for $4.1 billion and upgrading 49 Mirage-2000 combat jets for $2.4 billion, both in 2011. Only recently, it approved purchase of 490 MICA missiles from France for the upgraded Mirage planes at a cost of $1.23 billion. It also has 49 warships on order with several shipyards, of which 40 are with Indian shipyards. Three years ago, it had bought eight P-8I maritime reconnaissance planes from the US for $2.1 billion and this order is likely to go up to 12 planes. Several artillery purchases for its army, at an estimated cost of over 20,000 crore ($4 billion), are also due. In particular, the proposal to buy 145 ultralight howitzers from the US for $400 million under a government-to-government sale is progressing. Of the capital outlay, 32,057 crore ($6.5 billion) will go towards aircraft and aeroengine purchases for the three services, of which 23,701 crore ($4.5 billion) will go to the air force alone. The navy will get 13,617 crore ($2.7 billion). Another 7,242 crore ($1.5 billion) will go for infrastructure development. India will spend 16,325 crore ($3.2 billion) on other military equipment, apart from 2269 crore ($450 million) on heavy and medium vehicles. It will also utilize 4,640 core ($900 million) of its defence capital expenditure on research and development.