: Amid the global economic slowdown that fuelled fears of a cut in defence spending, Union Finance Minister P. Chidambaram has given a 14 per cent hike in the country’s defence budget aimed at sustaining the armed forces’ modernisation drive.

The Defence Ministry’s allocation is proposed to be Rs.2,03,672 crore, up by Rs.25,169 crore from last year’s revised estimate of Rs.1,78,503 crore. The Budget estimate in 2012-13 was Rs.1,93,407 crore, but tough economic conditions prompted the Finance Ministry to cut it by Rs.14,904 crore.

“I propose to increase the allocation for defence to Rs 2,03,672 crore. This will include Rs 86,741 crore for capital expenditure,” Mr. Chidambaram said while assuring the Lok Sabha that financial constraints would not come in the way of providing any additional requirement for the security of the nation.

Reacting to the allocation, Defence Minister A.K. Antony said taking into account the difficult economic situation both at home and abroad, the Finance Minister had done a good job. “Factoring the current economic scenario, he has been fair to the defence sector also by increasing the budget and assuring that should there be any urgent need in future the same will be provided,” he said.

The country is going in for big ticket purchases like warships, missile systems, artillery guns, multi-role fighter jets and transport planes as well as improving the infrastructure in the north-east, bordering China. Difficult economic conditions notwithstanding, IHS Jane’s has predicted that India will be the world’s fourth-largest defence spender by 2020, just behind the U.S., China and Russia. It will surpass France, the U.K. and Japan. According to IHS Jane, India’s defence spending will reach $65.4 billion in 2020. In the pipeline are one of the largest global defence order for 126 Rafale fighter jets from Dassault Aviation of France, estimated to be anywhere between $10 to $20 billion.

Contract negotiations with the French firm are in an advanced stage, which edged out Eurofighter in the race to bag the order. The deal is likely to be signed by the middle of this year.

Another key order will be for a mid-air refueller, for which Airbus A-330 MRTT has been chosen. Among other major acquisitions in the offing are the 22 Apache attack choppers and 15 heavy-lift choppers.

Nation is in process of going for big ticket purchases and improving infrastructure in north-east