Defence Ministry Expects 15 To 20 Percent Rise In Allocation (19-Feb-2010)
Due to increase in expenditure on its modernisation drive, the Ministry of Defence is hoping a substantial increase of 15-20 % in its budget allocation for the next financial year (2010-11).
Mr. M. M. Pallam Raju, Minister of State for Defence said an increase of 15 to 20% in the budgetary allocation is expected this year as against Rs. 105,600 crore in 2009-10.
Mr. Raju said the government is expecting an increase mainly on the back of the increase in revenue expenditure and on the implementation of Sixth Pay Commission Report. Besides, there is an importance on modernisation and new acquisitions.
However, last year the country had witnessed a record making increase of 34 % in the allocation of Budget, accounting to Rs. 105,600 crore.
Mr. Raju also said currently the government is not planning to increase the 26 % cap on FDI in defence sector, even though there was a request made from the industry.
He said that there are no plans on privatisation of ordnance factories by the government. But he also emphasised on the need for modernising the ordnance factories, shipyards and other defence PSUs with an objective to attain greater quality.
He added that the government has the responsibility to look after employees of ordnance factories as it is not good to leave them in the lurch.
Budget should consider providing sufficient incentives to the defence sector, says Richard Rekhy, Head of Advisory, KPMG.
Meanwhile, Mr. A K Antony who is India''s Defence Minister announced at the Defexpo earlier this week that a new policy related to defence production will be shortly launched and the discussion was already on with stakeholders of the supplier of the defence equipment. The defence equipment is mostly taken from the Indian industry in order to show the Indianisation of the defence production.
He said that in Defexpo 2008, 200 companies participated whereas in 2009 the number of companies participated had gone up to 300, which shows that the Indian companies are becoming self confident and self reliance.
Antony said that India''s defence expenditure is going to increase in proportion with the overall growth of the economy.
He said the country''s political security situation demands rapid modernisation of armed forces and he called upon the private sector to participate in the process of indigenising the armament needs of India.
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