Rs 7,870 crore Cut in Defence Capital Budget - The New Indian Express

Rs 7,870 crore Cut in Defence Capital Budget

Published: 24th January 2014 07:49 AM

Last Updated: 24th January 2014 08:30 AM

The Centre on Thursday effected a Rs 7,870-crore cut in the defence capital budget  for 2013-14, even as the Defence Ministry failed to seal deals for the 126 combat planes, 22 attack choppers and 15 heavy lift helicopters.

The Centre, however, transferred the amount to the revenue budget to meet expenses incurred on salaries, pensions and establishment.

“The defence capital budget for 2013-14 has  been revised to Rs 78,871 crore from Rs 86,741 crore. The deducted amount will be transferred to the revenue budget to meet recurring expenditure,” a Defence Ministry source said here.

In February 2013, the Centre had earmarked as defence budget Rs 2.04 lakh crore. The cut in the budget worked out to nine per cent.

A look at the proposed deals:


In September 2013, the government effected a 10 per cent cut in the defence revenue budget, amounting to nearly Rs 12,000 crore from the originally fixed Rs 1.17 lakh crore, for revenue expenditure.

Key contracts, such the Rs 1 lakh crore combat aircraft deal with French firm Dassault Aviation for 126 Rafale planes, have been pending for two years now, primarily because of the protracted contract negotiations. 

If the deal for the combat planes is signed with Dasault Aviation, India will have to shell out 15 per cent of the contract’s worth as down payment and that might come close to Rs 15,000 crore or even more.

The Centre had, early this fiscal year, asked the armed forces to prioritise their  modernisation and procurement plans.

Deals for the 22 attack helicopters for Rs 7,000 crore and 15 heavy-lift choppers for Rs 5,000 crore, both from US firm Boeing, 145 M777 ultra-light howitzers for Rs 3,500 crore from US-based BAE Systems, and six Airbus MRTT midair refuelers worth Rs 10,000 crore are all waiting to be signed for over a year now.

In the current fiscal, the Defence Ministry has signed only one major deal for six C-130J planes worth Rs 4,000 crore from the US firm Lockheed Martin, that too in late December 2013.

With the next general elections scheduled for April-May 2014, the ministry might not sign any more defence contracts this fiscal and let the new government take decisions on the pending contracts.

During the extended winter session of Parliament next month, the UPA government is in all likelihood get a vote-on-account passed, so that the new government gets a freehand to decide on the budget for the next fiscal.

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No Warship Sale to Lanka; Only Patrol Vehicles, Centre to HC  

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