ASSIGNMENT

ON
“Allocation for Defence
in Budget”

Submitted by
S.Mahendran
07MBA059
Defence- Budget:
Finance Minister P.Chidabaram said that the defence
allocation for the coming year would be Rs 1, 05,600
crore, a hike of ten per cent from last year's allocation of
Rs 96,000 crore. But in actual terms, the hike is 14.16
per cent as that of last year as the Defence Ministry
could only spend Rs 92,500 crore, leaving a sum of Rs
3,500 crore unspent, apparently due to two major
contracts for purchase of helicopters and 155 MM
artillery guns not going through.
Allocations:
 allocation on capital outlay running into Rs
48,007 crore.
 Of the total allocation, Rs. 480 billion has been
earmarked for the purchase of Hardware.
 Rs. 579 billion has been allocated for the three
services and for R&D.
 Of the three services, the 1.1 billion strong
Indian Army will expectedly get the Lion’s share
of Rs. 362 billion, followed by the Indian Air
Force(Rs. 108 billion) and the Indian Navy(Rs. 74
billion).
 The Defence Research and Development
Organisation has been allocated Rs. 33 billion.
 Rs. 155 billion earmarked for pensions and Rs.
440 million for 22 Sainik Schools.
 The Finance minister also added, “I have assured
the Defence minister that more money would also be
provided if necessary, especially for capital expenditure.”
Problem Remains:
Though there was substantial hike in defence
budget, India's defence spending continued to be below
two per cent of the GDP far less as compared to
Pakistan's 5 per cent and China's almost 7 per cent. It is
for the first time in at least a decade due to fiscal
pressures and larger outlays for farm, health and
education sectors.
View of Defence Minister:
“I’m happy. You have heard the Finance Minister
say on the floor of the house that more money would be
provided, if required, particularly for capital
expenditure…. This will drive the modernization drive of
the Forces” said Defence Minister, A.K.Antony.