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The Centre is likely to increase the defence allocation in the Budget by at least 20% from R2.04 lakh crore in the last fiscal. The interim Budget had envisaged a 10% increase in the defence budget for the current year, an estimated Rs 2.24 lakh crore, which includes capital expenditure of about Rs 89,600 crore.
If a 20% hike in the Budget is effected, that would be the highest ever annual increase in the Budget for the armed forces and would be in keeping with the Modi government's intent to avoid any laxity in India's defence preparedness. Recently, the government had made the entry of private sector easy in many areas of defence production by doing away with the licensing requirement.
The government is also considering allowing 100% FDI in defence production, where currently FDI is generally limited at 26%. Sources in the defence ministry indicated major initiatives will be taken to reform the sector and a decision to raise FDI cap could be taken during the Budget announcements.
“The three services have made their presentation to the finance minister seeking at least 28 % hike in the Budget (from FY14 level). But right now the government wants to first clear the backlog in procurement as part of the modernisation plan announced in the election manifesto. Also the issue of One Rank One Pay (OROP) has to be addressed and that is expected to take a huge share of the Budget,” said an MoD official.
The one-rank-one-pay scheme announced by the UPA government ensures the retired soldiers of the same rank and the same duration of service receive the same pension, irrespective of their date of retirement.
The proposed hike in the Budget is expected to hasten the process of completing order backlogs and initiate the creation of three new triservice commands for space, cyber and special forces.
The much-delayed $20-billion 126 Rafale medium multi-role combat aircraft (MMRCA) deal with France is expected to be inked soon, therefore, the first instalment that has to be made after inking the deal will be included in the Budget, and the payments of pending projects such as the $1-billion procurement of six additional C-130J Super Hercules aircraft, 22 Apache attack helicopters ($1.4 billion), 15 Chinook heavy lift helicopters ($1 billion) and 145 M-777 ultra-light howitzers ($885 million) are expected to be considered while announcing the defence budget.
Revenue spending is another area likely to receive a boost
Defence allocation likely to go up by 20% - Financial Express
If a 20% hike in the Budget is effected, that would be the highest ever annual increase in the Budget for the armed forces and would be in keeping with the Modi government's intent to avoid any laxity in India's defence preparedness. Recently, the government had made the entry of private sector easy in many areas of defence production by doing away with the licensing requirement.
The government is also considering allowing 100% FDI in defence production, where currently FDI is generally limited at 26%. Sources in the defence ministry indicated major initiatives will be taken to reform the sector and a decision to raise FDI cap could be taken during the Budget announcements.
“The three services have made their presentation to the finance minister seeking at least 28 % hike in the Budget (from FY14 level). But right now the government wants to first clear the backlog in procurement as part of the modernisation plan announced in the election manifesto. Also the issue of One Rank One Pay (OROP) has to be addressed and that is expected to take a huge share of the Budget,” said an MoD official.
The one-rank-one-pay scheme announced by the UPA government ensures the retired soldiers of the same rank and the same duration of service receive the same pension, irrespective of their date of retirement.
The proposed hike in the Budget is expected to hasten the process of completing order backlogs and initiate the creation of three new triservice commands for space, cyber and special forces.
The much-delayed $20-billion 126 Rafale medium multi-role combat aircraft (MMRCA) deal with France is expected to be inked soon, therefore, the first instalment that has to be made after inking the deal will be included in the Budget, and the payments of pending projects such as the $1-billion procurement of six additional C-130J Super Hercules aircraft, 22 Apache attack helicopters ($1.4 billion), 15 Chinook heavy lift helicopters ($1 billion) and 145 M-777 ultra-light howitzers ($885 million) are expected to be considered while announcing the defence budget.
Revenue spending is another area likely to receive a boost
Defence allocation likely to go up by 20% - Financial Express