India goes for huge defence spending
India yesterday enhanced annual budgetary allocation for defence expenditure by 4.5 per cent to Rs 2.03 lakh crore for the financial year 2013-14, setting at rest speculation that the country's slowing economic growth could affect its military acquisitions.
Of the total defence outlay for 2013-14, Finance Minister P Chidambaram, who presented his budget in Parliament in the morning, said Rs 86,741 crore will be for capital expenditure in defence sector.
Earlier this month, Defence Minister AK Antony had told reporters in Bangalore that "India is not an island. The world economy is going through a tough time, we will have to cut down."
He had, however, said there will be no cuts in "priority areas" and the "operational preparedness" of the military will not be affected.
Nuclear-powered India and China have a territorial dispute. China's military build-up along its frontier as well as competing interests of India and China in the South China Sea and Indian Ocean are frequent sources of stress in their bilateral ties.
Since concerns last year about India's credit rating and budget deficit, India has been curbing spending and it was speculated the austerity drive could hit the government's spending for defence and social sector programme.
According to the Stockholm International Peace Research Institute, India received nine percent of global arms transfers from 2006 to 2010, making it the world's leading importer of weapons.
New Delhi had initially budgeted about 1.93 trillion rupees ($36 billion) for defence spending in the financial year to March, an increase of 17 percent from 2011-2012 when spending was hiked by another 12 percent.
The budget presented by Chidambaram yesterday pegs fiscal deficit of Asia's third largest economy at 4.8 per cent of GDP for 2013-14, as against 5.2 per cent in 2012-13 (the financial year which ends on March 31 this year).
In his budget speech, Chidambaram said India faces the challenge of getting back to its potential growth rate of 8 per cent.
Only China and Indonesia are growing faster than India, he added.
India's total expenditure for financial year 2013/14 has been fixed at 16.65 trillion Rupees and plan expenditure at Rs 5.55 trillion.
The budget proposed a surcharge of 10 per cent on rich taxpayers with annual income of more than 10 million rupees a year.