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Budget stays at Rs 141,703 crore
August, 04th 2009

India's defence expenditure during 2009-10 remains unchanged from Rs 141,703 crore ($28 billion) allocated in the interim budget earlier this year - which was a hike of 34 percent over the previous year.

Finance Minister Pranab Mukherjee, while presenting the budget in the Lok Sabha, had a word of cheer for soldiers and junior commissioned officers (JCOs), saying their pensions would be enhanced. However, the officer cadre, which had led the "one-rank-one-pay" (OROP) demand, has been ignored.

In presenting the interim budget on February 16, Mukherjee had justified the 34 percent hike by saying a security "threshold has been crossed" with the Mumbai terror attacks.

"We are going through tough times," Mukherjee had said at the time, adding: "The Mumbai terror attacks have given an entirely new dimension to cross-border terrorism. A threshold has been crossed. Our security environment has deteriorated considerably."

Of the allocation for the fiscal that began April 1, plan expenditure for defence has been pegged at Rs.86,879 crore against Rs 73,600 crore for the financial year just ended March 31.

This includes Rs.54,824 crore for capital expenditure as against Rs 41,000 crore in the revised estimates for 2008-09.

In real terms, however, the budgetary hike works out to little over 23 percent as the revised expenditure for 2008-09 has been placed at Rs 114,600 crore against the allocation of Rs 91,681 crore.

As in past years, the 1.1 million strong Indian Army has received the lion's share of 41 percent or Rs 58,648 crore, with the Indian Navy being allocated Rs 8,322 crore and the Indian Air Force Rs 14,318 crore.

The army's allocation is even larger than the Rs 54,824 crore that has been set aside for capital expenditure for all three services.

However, in the case of capital expenditure, the bulk of this - almost Rs.20,000 crore - has been set aside for the air force, against Rs.17,767.95 crore for the army and Rs.11,873.73 crore for the navy.

What remains to be seen is how much of this will actually be spent by the time the fiscal ends March 31, 2010, as the armed forces returned Rs.7,000 crore of the Rs.48,007 allocated for capital expenditure for 2008-09.

For the army, the budgetary hike - minus the allocation for capital expenditure - works out to a little less than Rs.10,000 crore over the revised estimates of Rs.48,195 crore. The original allocation for the army in the 2008-09 proposals was Rs.36,270 crore.

For the navy, the hike is a mere Rs.288 crore over the revised estimates of Rs.8,034 crore for the fiscal just ending but a rise of Rs.901 crore over the original allocation.

For the air force, the hike works out to Rs.1,109 crore over the revised estimates Rs.12,199 crore for the closing fiscal against an original allocation of Rs.10,855 crore.

Of its allocation, the army will spend a staggering Rs.36,081 crore or 64 percent on pay and allowances. The navy has set aside Rs.2,850 crore or 34 percent on this count and the air force Rs.4,880 crore or 34 percent.

Taken together, the three services will see Rs.43,811 crore or nearly 54 percent going toward pay and allowances.

The budget has also allocated Rs.21,790 crore for pensions, Rs.4,757 for the Defence Research and Development Organisation (DRDO) and Rs.832 crore for defence ordnance factories.

Curiously enough, while Mukherjee said that the enhanced pensions would annually cost the government Rs.2,100 crore, there was no mention of this in the budget documents.

"The decision will benefit more than 12 lakh jawans (soldiers) and JCOs. Certain benefits being extended to war wounded and other disabled pensioners are also being liberalised," Mukherjee said.

Stating that the country owed a deep dept of gratitude to "our valiant ex-servicemen", the minister said the committee headed by the cabinet secretary on OROP had submitted its report and the committee's recommendations have been accepted.

"On the basis of these recommendations, the government has decided to substantially improve the pension of pre-1.1.2006 defence pensioners below officer rank (PBOR) and bring pre-10.10.1997 pensioners on par with post 10.10.1997 pensioners. Both these decisions will be implemented from 1st July 2009, resulting in enhanced pension for more than 12 lakh jawans and JCOs.

"These measures will cost the exchequer more than Rs.2,100 crore annually. Certain pension benefits being extended to war wounded and other disabled pensioners are also being liberalised," Mukherjee said.

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