NEW DELHI, Feb 28: Indian Finance Minister P. Chidambaram on Wednesday announced a 6.8 trillion rupee federal budget for fiscal 2007-08 (April-March) with defence allocation taking up 14 per cent of the total outlay, which itself is 2.4 per cent of the GDP.
Mr Chidambaram said 43 per cent of the proposed defence expenditure was earmarked for equipment purchase. “Any other additional requirement for the security of the nation will be provided,” he told a cheering Lok Sabha, which buried its noisy differences to hear the speech with rapt attention.
The actual quantum of the increase in the defence outlay can be seen in two ways in percentage terms over last year’s allocation. While defence spending would go up to Rs960 billion from the previous year’s budgeted allocation of Rs890 billion, the documents reveal that what was actually spent was just Rs860 billion. Therefore, in real terms, the increase in the current budget is 11.6 per cent or Rs100 billion.
Defence Minister A. K. Antony welcomed Mr Chidambaram’s statement. “With this commitment by the finance minister, we are satisfied,” he told a TV channel.
A sum of Rs410 billion has been allocated for capital expenditure against last year’s budgeted figure of Rs375 billion, indicating that the Ministry of Defence had spent only part of the capital outlay as the revised estimates put spending last year at Rs345 billion.
A survey by the Business Standard business daily showed the services surrendered Rs30 billion. The biggest chunk of surrendered funds was contributed by the Indian Air Force followed by the Army.
Nearly Rs20 billion was returned by the Air Force on account of non-spending on aircraft. The Army returned nearly Rs18 billion, a sum that was required to buy equipment but it could not be spent in time.
This year’s capital outlay for defence has increased because of the aircraft purchase proposals by the Navy and the Air Force.
