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INDIA DEFENCE SPENDING FOR 2010-2011

INDIA DEFENCE SPENDING FOR 2010-2011 AT 2.2 PER CENT OF GDP
By Bulbul Singh

03 Mar 10. India’s defence spending for the financial year 2010-2011 will include finalization of the engine for Light Combat Aircraft, (LCA), equity tie up arrangement for the joint development of Fifth Generation aircraft and Multirole Transport Aircraft (MTA) with Russia, upgrade of 51 French Mirage aircraft, and purchase of a variety of helicopters, 155mm-52 calibre guns, air defence weapons and missiles.

The Indian Air Force budget spending for 2010-2011 is up by 25% for buying fresh assets, though the overall defence spending has been marginally increased from $30.8bn in 2009-2010 to $31.8bn 2010-2011. (calculated at the exchange rate of 46 Indian Rupees to be equivalent to one USD).

Besides, additional funds have been provided to pay for the increased price of the Russian aircraft carrier, Admiral Gorshokov, where the price has been finally settled at $2.330bn as against the contracted price of $970m stuck in 2004 between Indian and Russia.

The defence spending on year-to-year basis is a jump of only 3.98% in 2010-2011, compared to a big jump of 34% last year. The outlay for Defence comprises $18.98bn for Revenue expenditure and $13.04bn for Capital expenditure.

A substantial part of Revenue expenditure is incurred on Stores & Equipment, Transportation, Revenue Works, Maintenance of Buildings and Installation, the Capital Expenditure is used to purchase fresh weaponry and equipment from overseas and domestic sources.

There has been a growth in Capital expenditure by 14.20% in 2010-2011, compared to a growth of only 9.44% in 2009-10, which would mean that more money has been allocated under the Capital Head or buying weaponry, as compared to last year, in percentage terms. However, this is still far away from the target of giving 50% of the total budget to Capital spending and the other 50% as Non-Plan expenditure.

The share of India’s Defence spending as a percentage of GDP is 2.30%in 2010-2011 compared to 2.12% of GDP last year. The share of the Indian defence budget in total Central Government expenditure however remains around 13%.

The Indian Army with a budget of $16.2bn in 2010-2011 gets the lion’s share followed by the Indian Air Force at $8.7bn, the Indian Navy at $4.66bn and Defence Research and Development Organisation (DRDO) at $2.13bn.

However, in terms of Capital Expenditure, the Air Force with a budget of $5.48bn has the largest share (42 per cent), among the three services, followed by the Army ($3.75 bn; 29 per cent) and the Navy ($2.63bn; 20 per cent).

The defence programs, which are likely to be contracted in the next two to three years, include purchases of a variety of 155mm guns at a cost of around $6bn, purchase of a variety of air defence systems for the Indian Army, Air Force and the Indian Navy, purchase of helicopters, including utility, medium-lift and combat helicopters.

The Indian Air Force is also likely to finalize by 2011-2012 the Medium Range Multirole Combat Aircraft (MMRCA) program under which 126 fighters are to be bought. The program has entered the flight test stage. The contenders are the Boeing F/A-18, Lockheed Martin F 16IN, MiG-35, Dassault Aviation Rafale, Eurofighter Typhoon and Saab Gripen NG.

The Indian Navy will put into orbit a dedicated military satellite in 2010, and enter the global market for the purchase of six more submarines worth $5bn.

Defence analysts however said the budget needs to be increased as China has a budget of $70.37bn which is 2.2 times that of India’s 2010 budget. Compared to China’s 7 per cent and Pakistan 5 per cent, India’s defence budget continues to be around 2 per cent of the Gross Domestic Product (GDP).

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