After four decades, defence ministry to spend full budget quota

Carrying out a massive modernisation programme, the defence ministry for the first time after the 1971 war is likely to spend its full quota of Rs60,000 crore for capital acquisitions in the current fiscal.

The big ticket deals such as the US-made C-130J transport planes, the preliminary design contract with Russia for the fifth generation fighter aircraft (FGFA) and procurement of Akash missile defence systems have helped the ministry to achieve the significant milestone, defence ministry officials told Press Trust of India in New Delhi.

This year's total defence budget was Rs1.47 lakh crore of which Rs87,344 crore was marked for revenue expenditure and the rest was for capital expenditure.

Officials said that due to the accelerated modernisation programme in the last five years, the capital expenditure has seen a three-fold increase to Rs2.27 lakh crore for the period between 2005 and 2010.

The value of 687 contracts signed during this period was Rs2.32 lakh crore.

"From 1998 to 2004, the expenditure under the capital head was Rs82,297 crore, whereas in the next six years— from 2004-05 to 2009-10— it went up by three times to touch the mark of Rs2,27,566 crore," they said.

During the last fiscal, the ministry had for the first time crossed the Rs50,000 crore mark.

Officials said that over the years the money allocated under the capital expenditure has seen a steady increase except for 2005-06 and 2008-09, when a bulk of 25% of the money under the capital head remained unused due to the cancellation of major deals.

"Otherwise, the expenditure under the capital head is showing a very good trend in using the allocated money," they said.

In 2009-10 the allocated money under the capital head, in fact, overshot by a small margin.

India is currently the 10th largest defence spender in the world with an estimated two per cent share of global defence expenditure.

The three armed forces have embarked on a massive modernisation programme under which India is expected to spend at least US$80 billion in next five to six years for acquisition of weapon systems and platforms.

The big ticket deals to be signed in the near future include the US$11 billion M-MRCA contract for 126 fighter jets, a deal for procuring six advanced conventional submarines under Project 75 India estimated to cost US$12 billion and the mega deal for co-developing the fifth generation fighter aircraft with Russia which is likely to cost US$30 billion in next 20 years.