NEW DELHI, Fed 28: India unveiled a Rs650 billion defence budget for fiscal 2002-2003 (April-March) on Thursday, registering a relatively moderate 4.8 per cent increase over its outlay in the previous year when Finance Minister Yashwant Sinha had allocated Rs620 billion for defence.

Presenting a 5.3 per cent fiscal deficit budget for 2002-03, Sinha made a number of changes in excise and customs duties and direct taxes to net an additional Rs105,000 million a year.

There is, however, no change in the personal income tax rates though a 5 per cent national security surcharge has been levied. The 2 per cent Gujarat surcharge levied on income tax last year has now been abolished.

In 1996, the then finance minister, P. Chidambaram, presented a budget which allocated Rs278 billion for defence. In 1997, that figure had gone up to Rs356 billion. In 1998, Yashwant Sinha raised it to Rs412 billion. In 2000, Rs586 billion and in 2001, to Rs620 billion.

Explaining last year’s increase, Sinha had said at that time that “the funds crunch hit the army’s preparedness during the Kargil conflict in May-July 1999.”

On Thursday, his explanation for a fresh increase was not as dramatic, nor was the allotted money. “Modernisation and upgradation of our defence preparedness is an area of highest national priority. I have made a provision of Rs650,000 million for defence expenditure for next year,” he declared.

Sinha, however, said his proposal was not final since “in case of need, I shall not hesitate to provide more funds for this purpose,” he promised.

“As a measure of welfare of the defence forces and their families, and, as announced by the Prime Minister in his Independence Day speech, a major programme of housing construction for defence personnel is also being taken up,” he said.

Presenting his fifth budget on Thursday, Sinha described his proposals as one that aimed at consolidating India’s economic reforms regime.

“This is a budget for consolidating, widening and deepening the reform process,” he told the Lok Sabha, the lower house of parliament. “This is a budget devoted to development. This is a budget to further promote partnership with the states for a better tomorrow for the people of India.”

Indian stock markets crashed in mid-session to show their disappointment with the budget. The benchmark Sensex was down more than 4 per cent towards the close of trade. In the post-budget session, stocks fell as foreign and domestic funds began offloading major chunks of their holdings.