Sluggish economy puts MoD’s demand for more money on hold

In the wake of the slow economic growth causing concern amongst the policymakers, the Defence Ministry has put its plan to seek an additional budget of around Rs. 50,000 crore for the year 2012-13 on hold.

When the Finance Minister had announced the 2012-13 defence budget of Rs. 1,93,000 crore, Defence Minister AK Antony had made it known that the amount was 15.5 percent less than the estimated requirement of the services. Antony announced that as per projections his ministry needed Rs. 2,39,123 crores in total and thus they will require an additional amount of Rs 45,716 crores.

“The budget estimates were given in accordance with the assessment of the new emerging threat perception from neighbouring countries and the forces required it to meet the new challenges. However, with the other ministries facing cut, the defence ministry has also put the proposal of its demand in cold storage,” sources said.

Keeping in pace with the emerging threat scenario around India, the Indian Armed Forces – Army, Navy and Air Force- have been undergoing heavy modernization in the recent years. A reflection of this is that unlike about a decade of lost modernization when its sluggish acquisition processes resulted in unspent defence budgets year after year, the Defence Ministry has managed to completely spend the defence budget for the second consecutive year in 2011-12. In fact, the Ministry had sought an additional budget of over Rs. 3,000 crore.

For the year 2012-13, Antony had said: “But because of the changing threat perception, our Armed Forces need more aircraft, more warships, more tanks, more helicopters, and so on. All these things need more money.” In the current financial year, the Defence Ministry is expected to conclude the largest open tenders to buy 126 medium multi-role fighter aircrafts at an estimated value of Rs. 48,000 crore along with scores of other multi-billion dollar tenders for artillery, helicopters and warships reaching final stages.

In comparison to the defence budget of Rs.1.70 lakh crore in 2011-12, this year Indian defence budget was 13.15 percent higher at Rs 1.93 lakh crore, out of which Rs. 79, 579 crore was to be spent on purchase of new weapons and platforms.  The hike though considerable as per the Indian standards will be no match to the country’s eastern neighbor. China’s increased budget has continued to cause concern in India. According to Pentagon’s South Asian Defence and Strategic Year Book China’s total military spending has increased by 189 percent between 2001 and 2010, an average annual increase of 12.5 percent. As per data, China is the second largest spender of defence after the US and India comes at position 9.