Despite Budget Cut, Defence Ministry Continues With Modernisation Drive

Notwithstanding the financial constraints, the ministry, in this fiscal till December 31, has been able to spend over 82 per cent of its budget for modernisation.

Published: 12th January 2014 05:23 PM  |   Last Updated: 12th January 2014 05:26 PM   |  A+A-


Despite resistance from Defence Ministry, the government has cut more than Rs 7,800 crore from the former's budgetary allocation for this year.

However, notwithstanding the financial constraints, the ministry, in this fiscal till December 31, has been able to spend over 82 per cent of its budget for modernisation while continuing with the drive to procure and upgrade military assets, which has seen a whopping Rs 3.25 lakh crore (around USD 55 billion) being spent over the last five years.

There was a cut of more than Rs 7,800 crore in the defence budget of Rs 2.03 lakh crore for the 2013-14 fiscal despite opposition to the same from the ministry, defence sources said. They, however, added that, with the diversion of funds internally, the ministry has been able to manage.

Last year as well, Defence Ministry had faced a budget cut of more than Rs 10,000 crore in view of the economic slowdown in the country.

Utilising its full allocation of funds and reversing the earlier trend of limited utilisation, the ministry procured and upgraded a large chunk of military equipment, including nuclear submarines, special operations transport aircraft and fighter planes, sources said.

This year, the ministry has already spent 82 per cent of the capital acquisition budget of around Rs 80,000 crore and is slated to fully utilise its allocation.

Major procurements this year

  • 10 C-17 heavylift
  • 12 C-130J ransport aircraft
  • 2 P-8I anti-submarine warfare planes
  • Akula-II class nuclear submarine (on lease)
  • Su-30MKI aircraft

Besides, money was spent on developing the indigenous LCA Tejas for the IAF and to upgrade 51 Mirage-2000 combat planes.

Previous spendings

  • 2009-10 - Rs 51,112 crore (106% of the allotted funds)
  • 2010-11 - Rs 62,056 crore (102% of the allotted funds)
  • 2011-12 & 2012-13 - Over Rs 1.38 lakh crore (102% of the allotted funds)

For this fiscal, the ministry's allocation was Rs 2.03 lakh crore, of which around Rs 80,000 crore were to be spent on modernisation. So far, 82 per cent of those funds has been spent. The balance would also be spent in the next few weeks, sources said.

A number of procurements are in the pipeline while some are in their final stages and expected to materialise in the coming months. Those include deals for 22 Apache combat choppers, 15 Chinook heavylift helicopters and the 126 Rafale combat aircraft.

Defence Ministry is also in advanced negotiations for a Fifth Generation Fighter Aircraft (FGFA) programme with Russia, on which it is expected to spend around Rs 1.5 lakh crore in the next 10-15 years.

It is also in the process of issuing the tender for the approximately Rs 60,000 crore deal for procuring six large conventional diesel electric submarines for the Navy.

The ministry has been seeking additional funds of Rs 40,000 crore since last year, but that request has been turned down in view of the slowdown, the sources said.

In view of the defence scams in which foreign firms were involved, the ministry has also worked towards promoting indigenisation in the defence sector for which it made a major procurement policy change to make the importing of weapons systems the last option for the three Services.


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