The defence budget for 1998-99 is expected to be increased by nearly 40 per cent over the previous years Rs 35,620 crore to Rs 48,000 crore. This will be the highest allocation ever for the defence sector.
Projections made by various wings of the defence establishment point towards substantially higher demands for capital expenditure, salaries and pensions and new weapons inductions and modernisation. The escalating arms race in the sub-continent, with Pakistan announcing the development of an intermediate range missile and India countering it with a production version of the Agni missile besides stockpiling of conventional weapons may put pressure on the government to hike allocation for the defence forces.
The Fifth Pay Commission has further put pressure on the defence budget and dissent from certain ranks of the Air Force demanding higher pay packets for non -flying jobs may force the government to keep the servicemen happy. Salaries, pensions and other benefits take away over 60 per cent of the defence budget, leaving little for capital expenditure and weapons purchase.
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This year, however, with the focus on high technology in defence, weapons induction and modernisation may receive a priority in funding.
The next batch of 10 Sukhoi fighters is due to arrive later this years and older fighters like the MiG-27s and Sea Harriers are due for upgradation at a cost expected to around Rs 2500 crore.
Similarly, the Navy has been clamouring for more ships and cabinet sanction is expected for six more ships of the INS Delhi class, the flagship frigate of the Navy. The Navys modernisation costs alone could come up to Rs 15,000 crore.
The new role for the Defence Research and Development Organisation to provide cutting edge technology in a rapidly escalating arms race environment is certain to gobble up substantial funds.
The DRDO gets about 5 per cent of the defence budget but is looking to hike it to to 10 per cent by 2002. As a result of the higher allocation, defence expenditure as a proportion of the total budget may cross the 16 per cent figure reached last year. This will be for the the second year that the defence allocation is expected to be hiked.
This years increase is put at around Rs 7,822 crore over the previous financial years allocation. The 1996-97 allocation was Rs 27,798 crore, a marginal hike over the previous years Rs 26,879 crore.