NEW DELHI, July 3: India’s defence planning has been hit by inflation hovering at 11 per cent, army chief Gen Deepak Kapoor said on Thursday.

“Though defence budget for 2008-09 is 10 per cent more than previous year’s allocation, we can very well gauge what impact inflation hovering at 11 per cent could have on defence planning,” Gen Kapoor said at a discussion with members of the Institute of Defence Studies and Analyses (IDSA).

Press Trust of India quoted him as saying that for the first time since India-China war of 1962, India’s defence budget had fallen below two per cent of the Gross Domestic Product (GDP).

“There has been a persistent decline over the years from 3.38 per cent of GDP in 1987-88 to 1.98 per cent today — much below the global average,” the army chief said.

Like any other developing nation, there was always competition to win financial support, he said. The nation, however, had to balance its budget between its security and developmental needs in a classical ‘guns versus butter’ debate.

To develop desired capabilities, the military planner faced the dilemma of improving capital versus revenue ratio. There had to be a required simultaneous rightsizing with induction of state-of-the-art weapons and equipment.

“In order to meet the two objectives and enhance the assurance of requisite capabilities, we are focused on indigenisation and collaborative approach, but without compromising on our operational capabilities,” he added. Of the various components of the defence budget, the army chief said, the component for modernisation of armed forces was very small.