02.28.2006, 06:28 AM, AFX News Limited
NEW DELHI (AFX) – The government is raising military spending by 7.2 pct to 890 bln rupees (19.8 bln US$) in the budget for the year to March 2007 to fund ongoing modernization, the finance minister said.
‘Keeping in mind the modernization of our defence forces I propose to increase the allocation for defence from 830 billion rupees to 890 billion rupees,‘ Finance Minister P Chidambaram told parliament as he presented the budget for the fiscal year starting April 1.
‘This will include 374 billion rupees for capital expenditure,’ Chidambaram said in reference to the country’s plans to upgrade military hardware for its armed forces.
The increase puts defence spending at 2.4 pct of GDP — much below the expectations of military-planners who have been campaigning for sustained spending of more than 3 pct of GDP to speed up the ongoing revamp process.
The country’s one mln-plus army, the world’s fourth largest, received the lion’s share of the funding at 322 bln rupees (7.15 bln usd), an increase of nearly 360 mln usd over last year.
The navy, which plans to build an aircraft carrier and is working on a nuclear reactor for a submarine project, received 1.49 bln US $– a 14.6 % hike from its 2005-2006 spending of 1.3 bln US $.
Pensions accounted for 2.93 bln usd, while the budget for the airforce, which hopes to buy 126 military jets for 6 bln usd in the current decade, was increased to 3 bln usd from 2 bln in the previous year.
Arms factories were alloted 77 mln usd and the remaining 5.25 bln usd was reserved for development projects or payments of hardware bought in previous years.
(1 usd = 44.495 rupees)