India's biggest ever increase in defence spending
India has increased defence spending by 28.2% to Rs585.87 billion ($13.94 billion) for Fiscal Year 2000-01 (FY00-01). The largest single-year increase in Indian history will be used to replace obsolete weapon systems and build a credible nuclear deterrent. The Rs130 billion increase raises India's defence expenditure from 2.3% to 2.5% of gross domestic product after several years of relatively flat spending. It follows last year's border war with Pakistan in the Kargil region of disputed Kashmir. "After the Kargil war India has to gear itself up", said Indian Prime Minister Atal Behari Vajpayee. Pakistan criticised the increased spending.
Procurement negotiations that are expected to be concluded before 31 March, the end of the present financial year, are at a standstill despite assurances by defence minister George Fernandes that investigations into all defence purchases from overseas contractors since 1985 would not affect new acquisitions ( Jane's Defence Weekly 16 February). Official sources say the army has shelved price and technical negotiations for all projects since Fernandes launched the inquiry last month. A substantial sum of money, earmarked for capital expenditure from the current budget remains unused and if not utilised by 31 March will revert to the central government fund.
Several defence contracts are usually signed each year in February and March by all three defence services to exhaust their budgets. "No MoD [Ministry of Defence] official responsible for finalising contracts wants to be involved in finalising any deals in case there are questions later on," one official told JDW. Stalled programmes include the acquisition of 310 T-90 main battle tanks (MBTs) and multi-barrelled rocket launchers from Russia, a Rs2.07 billion contract with Soltam of Israel to upgrade the 130mm M-46 field gun and negotiations for the South Africa LIW 155mm T-6 turret for installation on the Arjun MBT chassis.
In the new budget the army will receive Rs289.39 billion, Rs50 billion more than last year. It plans to acquire unmanned air vehicles, battlefield radar and improved artillery. The additional costs of the army's deployment along the Kargil border, estimated at around Rs100 million per day, will be met by an extra allocation of Rs17.33 billion. The Indian Air Force will receive Rs78.96 billion, which will help fund around 60 Advanced Jet Trainers, more Dassault Mirage 2000D fighters and the continued upgrade of its MiG-21bis fighters. "All-out efforts now need to be made to ensure that funds are optimally and speedily utilised for modernisation," said Chief of Air Staff ACM A Y Tipnis.
The Indian Navy received a smaller increase of Rs4.44 billion bringing its allocation to Rs40.4 billion. Defence officials said funding would increase in future to cover the purchase and modernisation of the Russian aircraft carrier Admiral Gorshkov , MiG-29 fighters to form a carrier air group, electronic warfare equipment and maritime reconnaissance aircraft. Officials said the marginally increased allocation of Rs31.05 billion for research and development, 5.2% of the military budget, reflects the service chiefs' lack of faith in the Defence Research and Development Organisation, which had promised to make India self-sufficient in its defence equipment needs by 2005. Programmes such as the Arjun MBT and Light Combat Aircraft are running late and over cost.
©Jane's Information Group 2000
Posted:7 March 2000
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