The allotment of Rs. 1,64,415.49 crore for the defence services is a 11.6 per cent rise from last year’s Rs. 1,47,000 crore. While the Indian Army has been allotted 51 per cent, Indian Navy has got 15 per cent and the IAF 28 per cent of the overall budget.

A study by Stockholm International Peace Research Institute (SIPRI) has reported that India has replaced China as the world’s top weapons importer for modernising its defence forces. India received nine per cent of major conventional weapons from 2006 to 2010, ahead of China, South Korea and Pakistan. The report further reveals that the worldwide arms transfers in 2006-10 was 24 per cent higher than in 2001-05 which was led by the Asia-Pacific region which imported 43 per cent of arms. It was followed by Europe at 21 per cent, the Middle East at 17 per cent and the Americas at 12 per cent. SIPRI’S study is based on hard statistics but if read between the lines, the modernisation process of Indian armed forces is not as rosy as it is made out to be. India has border disputes with China and Pakistan and there seems no solution in the near future. Add to this the problems of terrorism and internal security, and the picture becomes more dismal. The process of modernisation has been very slow. Acquisition of 126 medium multi-role combat aircraft (MMRCA) by the Indian Air Force is a desperate step to prevent the force level to fall below critical levels (it is already down to 29 squadrons from the immediate requirement of about 40 squadrons which should reach to 50 squadrons by 2032). Artillery modernisation plans have had endless slippages and army air Defence has already reached obsolescence. Many such examples can be quoted to prove the fact that India is way behind in its modernisation plans. Fortunately, India has finally realised the importance of the blue water navy as a strategic asset especially with the large coast line. Thus the Navy’s pace of modernisation is almost on track. Statistics of SIPRI also include defensive systems and force multipliers like AWACS, C130J Hercules, C-17 Globemaster, P-8i maritime patrol and reconnaissance aircraft which are big ticket acquisitions but do not add teeth to the defence forces.

Defence Budget 2011-12

Presenting the union Budget 2011-12, the finance Minister announced that “a provision of Rs. 1,64,415 crore has been made for defence services which include rs 69,199 crore for capital expenditure. Needless to say, any further requirement for the country’s defence would be met”. The actual allotment is Rs. 1,64,415.49 crore (about $36.03 billion) which is a 11.6 per cent increase from last year’s Rs. 1,47,000 crore (about $32.6 billion). The increase is due to the additional allocation of Rs. 17,071.49 crore over the previous budget with a break up of Rs. 7,872.68 crore for revenue expenditure and the remaining Rs. 9,198.81 for capital expenditure. Thus the revenue budget has grown by 9.01 per cent to Rs. 95,216.68 (about $21 billion) and the capital budget by 15.33 per cent to Rs. 69,198.81 crore (about $15 billion). The revised estimates for 2010-11 were Rs. 1,51,582 crore and the present allotment is an increase of Rs. 12,833 crore. This implies that the Ministry of Defence overspent last year and the increase from previous year is over eight per cent. But the picture will only be clear after the revised estimates are released. In terms of GDP it has fallen below two per cent. The breakdown is as follows:

Revenue: Rs. 95,216.68 (an increase of about nine per cent from last year’s Rs. 87,344 crore)

• Indian Army: Rs. 64,251.55 crore
• Indian Navy: Rs. 10,589.06 crore
• Indian Air Force: Rs. 15,927.95 crore
• Ordnance Factories: Rs. (-) 1,176.75 crore
• R&D: Rs. 5,624.87 crore

Revenue budget has increased due to pay and allowances and also due to procurement of stores, transportation, etc.

Capital: Rs. 69,198.81 crore (an increase of about 15 per cent from last year’s Rs. 60,000 crore)

• Indian Army: Rs. 19,163.07 crore (about $4.22 billion)
• Indian Navy (including naval fleet): Rs. 14,657.83 crore (about $2.9 billion)
• Indian Air Force: Rs. 30,223.83 crore (about $6.82 billion)
• Defence Research and Development Organisation (DRDO): Rs. 4,628.3 crore (more than $1 billion)

While the Indian army has been allotted 51 per cent, Indian navy has got 15 per cent and Indian Air Force (IAF) 28 per cent of the overall budget. Out of this, IAF has got the highest capital allocation with about 43 per cent, Army about 27 per cent and the Navy about 21 per cent. Highest allocation has been made to the Air Force keeping in mind the finalisation of the MMRCA and the C-17 Globemaster contract. Other big contracts in the horizon are light helicopters for the Indian Army and the IAF and ultra-light howitzers for the Indian Army. Apart from new schemes, a portion of the capital budget has to be kept for committed liabilities. However, this is an ongoing process and will not impinge into the funding of any new project.