Monday, February 28 2005 17:04 Hrs (IST) - World Time -

New Delhi: Signalling that current modernisation drive in the Armed forces would continue, the Government today (Feb 28, 2005) hiked the country's Defence Budget to Rs 83,000 crores for the year 2005-06 from Rs 77,000 crores, an increase of 7.8 per cent.

The Highlight of this year's Defence spending would be the steep allocation of Rs 34,472 crores made for the capital outlay.

Though in real terms it marked only an increase of about Rs 1,000 crores over last year's Arms acquisition funding of Rs 33,472 crores, in actual terms it amounts to fresh allocation as the Ministry for the first time in five years has been able to spend all the allocated funds under the head last year.

With a huge allocation on capital outlay, Defence Minister Pranab Mukherjee can now go ahead with major Arms acquisition programmes like buying killer-hunter Scorpene Submarines from France, Long Range Smerch rocket system from Russia and low-level transportable radars, all of which have been pending for more than a year with the Cabinet Committee on security.

The capital outlay funding in fact almost constitutes 41.4 per cent of the total Defence Budget.

Though there is an increase of Rs 6,000 crore in defence allocation, India with Defence spending of 2.5 per cent of the GDP still is lowest in the region. Pakistan and China's Defence expenditure almost ran upto to 5 per cent and 8 per cent of their respective GDP.

Besides the capital outlay head, the Defence Ministry has also spent funds allocated under Army, Navy, Air Force as well as DRDO heads.

Lauding the feat, Finance Minister P Chidambaram in his Budget speech said that after a gap, Defence expenditure in 2004-05 had matched Defence Estimates.

Labelling the hike in the allocation as "good", Defence Minister Pranab Mukherjee said this signalled that modernisation drive in the Armed forces would be given more momentum. He said the increased allocation was a "huge step up" in this drive. "We almost have a sum of more than Rs 34,000 crores as fresh allocation and this would enable us to go ahead with some vital hi-tech weapons systems."

The new Budget estimates also show a 21.1 per cent jump in spending for the Defence Research and Development, with allocation increased to Rs 2,814 crores from last year's figures of Rs 2,343 crores.

Similarly the funding of the Army has been boosted up by 12.3 per cent to Rs 31,242.70 crores from last year's 27,828 crores. The Naval allocation has been boosted to Rs 6,027.35 crores from Rs 5,293 crores and that of IAF (Indian Air Force) to Rs 9004.61 crores from last year's figures of 8,468 crores.

Defence experts and analysts have welcomed the continued hike in Defence spending, saying that Defence spending has to be kept up at 35 per cent annually to sustain the modernisation drive.