India Hikes Defence Budget By 17 Percent—–Chinese-Indian Arms Race

Indian Army
 India on Friday increased
its military spending by 17 per cent to $41 billion in the Union Budget
2012-13. Of this expenditure, $17.5 billion will be reserved for
procuring new equipment.
The hike comes a year after India had increased its budget expenses
by 11 per cent. A cumulative outlook over the past two years shows that
India has increased military spending by a third.
The move is also seen as a way to counter China’s 11 per cent defence spending increase just a few days ago.
Finance Minister Pranab Mukherjee, presenting the general budget for
the next fiscal in the Lok Sabha, said this allocation was based on the
present needs projected by the defence ministry and that further needs
for national security would be met.

The capital expenditure of the armed forces – that which goes towards
purchase of equipment – was set at around $ 17 billion, a 15.7 per cent
hike from last year’s capital allocation. 70 per cent of this amount
will go towards servicing contracts already signed. The rest will be
reserved for the procurement of new equipment, including procuring new
aircraft from French company Rafale.
The revenue component of the Defence budget amounted to $21.67
billion. This part of the budget that goes towards paying salaries, was
$18.15 billion in the budget estimate, but was $ 19.9 billion in the
Revised Estimates, suggesting the services had overspent under this
Commenting on the ballooning revenue aspect of the defence budget, Dr
Laxman Behera of the Institute of Defence Studies and Analyses said:
“Pay and allowances are obligatory in nature and the government has
little control over their growth, given the mandatory increase in annual
pay and dearness allowances. Moreover, most of today’s pay and
allowances constitute tomorrow’s defence pensions, over which also the
government has little control. The uncontrollable growth in these two
components have great implication on other aspects of the defence
On the capital side, India is on the verge of signing a USD $20
billion contract for 126 Rafale medium multirole combat aircraft, apart
from a USD 600 million deal for 75 Pilatus PC-7 basic trainer for its
air force.