New Delhi: Finance Minister P Chidambaram rolled out the Union Budget on Tuesday and hiked the defence spending by 7.2 per cent to Rs 89,000 crore ($19.8 bn).
"Keeping in mind the modernisation of our defence forces, I propose to increase the allocation for defence from Rs 83,000 crores to Rs 89,000 rupees," Chidambaram said.
"This will include Rs 374,000 crore ($8.3 bn) for capital expenditure," Chidambaram said in reference to the country's plans to upgrade military hardware for its armed forces.
The hike puts defence spending at 2.4 percent of GDP - much below the expectations of military -
planners who have been campaigning for sustained spending of more than three percent of GDP to speed up the ongoing revamp process.
The Defence Ministry is committed to making payments of thousands of crores in the next financial year each for an aircraft carrier and its complement of aircraft from Russia, submarines from France and advance jet trainers from Britain.
These include the Scorpene submarines, the Gorshkov aircraft carrier and the Hawk trainers.
On the capital expenditure side, the armed forces have made a strong case for increasing the outlay from the current Rs 34,375 crore.
This is to meet the commitments for orders placed by the present and previous governments and sign contracts for more equipment, primarily for the Army and the Navy.
More requirements like the Light Combat Aircraft, submarine rescue vessels and artillery will jostle for a share of the capital outlay.
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