Keeping up the tempo to modernise the armed forces, the government on Friday increased its defence spending by some 18 per cent and hiked the budget for capital acquisition by 15 per cent.

Finance Minister Pranab Mukherjee earmarked Rs.1,93,407 crore for Defence — which is 1.9 per cent of the GDP — in the budget proposals.

The figure accounts for 12.97 per cent of the total expenditure by the government.

While the country is expected to spend over Rs.50,000 crore each year towards modernisation of the armed forces, the military spending has hovered between 1.97 to 2.4 per cent of the GDP over the last few years.

The allocation represents a growth of 17.63 per cent over the budget estimate of Rs.1,64,415 crore for 2011-12 and a 13.15 per-cent growth over the revised estimate of Rs.1,70,937 crore for the current financial year that ends this month.

Considering that the government hopes to finalise the multi-billion-dollar deal to procure the Medium Multi-Role Combat Aircraft this year among other acquisitions, the budget proposal has allocated Rs.79,578 crore towards capital expenditure.

This signifies a jump of 15 per cent over the budget estimate of Rs. 69,199 crore for 2011-12. However, in reality some Rs.3,000 crore of this fund could not be spent amid reports of revenue-crunch leading to an across-the-board slash in the budget by the government.

The break-up of the allocation shows that the Army gets Rs.78,114.36 crore, against the budget estimate of Rs.64,251.55 crore in 2011-12 and Rs.71,479.27 crore under the revised estimate.

The allocation for the Navy is at Rs.12,548.02 crore, which compares well with the budget estimate of Rs.10,859.66 crore, but is not so favourable when juxtaposed with the revised estimate of Rs.12,146.93 crore.

The Air Force is being allocated Rs.17,705.81 crore, which is above the Rs. 16.137.38 crore allocation under the revised estimate for 2011-12, against Rs.15,927.95 crore under the budget estimate.

With the government aiming to increase the indigenous content in defence procurement, despite allocation for the Defence Research and Development Organisation (DRDO), there is a steady decline in utilisation for funds for the job.

If in 2010-11, the organisation spent Rs.1,218.25 crore, in the revised estimate for 2011-12 it spent Rs. 991.25 crore despite the budget estimate allocating Rs.1,116 crore under the head. Overall, its budget has been increased to Rs.5,995.56 crore, against Rs.5,386.01 crore under the revised estimate for 2011-12.

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