Battling the ongoing economic slowdown, the Centre has effected a five per cent cut in the Rs.1.93-lakh-crore defence budget for this financial year.
The cut is estimated to be around Rs.10,000 crore, Defence Ministry sources said.
It is likely to put the brakes on ambitious plans of modernisation within the Army, the Navy and the Air Force and push, to the next fiscal, several key acquisition plans. These plans include the acquisition of 126 Rafale fighter aircraft for the Air Force from French firm Dassault Aviation. The already-delayed Medium Multi-Role Combat Aircraft (MMRCA) project, worth $20 billion, will now be pushed beyond April 2013. Acquisitions of helicopters and missiles could also be delayed further, the sources said.
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Under the Rs.1.93-lakh-crore budget, Rs.1,13,829 crore is for revenue expenditure, including salaries and pensions, and Rs.79,579 for modernisation of the armed forces.
Defence Minister A.K. Antony recently indicated that the Ministry would struggle to get the allocated amount during the current fiscal. In view of the cut, the Ministry has asked the armed forces to focus on prioritising their procurements. The sources said the Ministry’s desire to encourage research and development in high-end technology would take even longer to fructify. The Ministry is also keen to encourage competition among defence public sector units.