Lower defence spend likely

Like last year, the 2005-06 defence Budget will see the three services getting resources only to pay for equipment they have already contracted to buy.

A down-to-the-wire defence Budget with revised estimates is likely this year owning to pressure from the Left parties.

The Left has asked the finance minister to keep defence expenditure low and also raised the question of the services' inability in spending what they had been allotted.

Top defence ministry and defence public sector undertaking (DPSU) sources said defence and finance officials had been having daily meetings with the services brass to figure out how to spend funds before the February 28 deadline, as this would be the basis on which they would be given fresh funds in the coming Budget.

The Army seems to be the biggest culprit. It had been allotted around Rs 900 crore for new schemes in capital expenses in the 2004-05 Budget.

It had managed to spend barely Rs 260 crore till December 4. Last week, DPSU was asked to take an order for equipment worth Rs 160 crore, moving the Army's expenditure to around Rs 440 crore.

Among the items that the Army was supposed to have ordered were Russian weaponry Smerch multiple launch rocket system (for which negotiations are still on), Tangoushka guns, and the Israeli Unarmed Aerial Vehicle (UAV) Heron.

The Indian Air Force (IAF), on the other hand, is hungry for funds. It has already spent its capital outlay of Rs 12,825 crore in the 2004-05 Budget (advances for the Hawk, Awacs and Jaguar) and requires an additional Rs 3,000 crore for the nine Jaguars and two Sukhoi-30 MKIs that Hindustan Aeronautics Limited is building for the IAF.

Therefore, the IAF's capital outlay is likely to increase by a healthy 15-20 per cent on account of new schemes. In the last Budget, the IAF's capital outlay had increased by Rs 8,000 crore.

The Navy has got the Scorpene submarine cleared by the Cabinet Committee on Security (CCS) last week but it is unlikely that it will feature in this year's Budget, though advance payments will have to be provided for.

The size of the defence Budget in 2004-05 was Rs 77, 000 crore, up nearly 30 per cent from the revised estimate figures of Rs 60,300 crore and 17 per cent over the Budget estimates.

This year, the increase is likely to be between 15 per cent and 20 per cent.