India on Friday jacked up defence spending by 10 percent to 26.4 billion dollars, the steepest hike since independence to fund a mammoth modernisation programme. Finance Minister Palaniappan Chidambaram boosted expenditure for the fiscal year ending March 2009 from the previous allocation of 24 billion dollars saying security was of paramount importance.
India plans to spend at least 30 billion dollars until 2012 to modernise the military with an immediate purchase of 126 warjets costing 12 billion dollars followed by ships, submarines, artillery and the rate and 40 percent funds will go for the upkeep of assets and our existing manpower," a senior infantry commander said.
Chidambaram also set aside millions of dollars in addition to the annual defence outlay to set up institutions and schools for families of servicemen and women. He committed 1.85 billion dollars to the navy which is shopping for six submarines in addition to the six it bought last year from Armaris and European defence firm MBDA for three billion dollars.
The 137-ship navy is also in advanced negotiations to buy eight long-range reconnaissance planes from either US-based Boeing or the European consortium EADS for two billion dollars, besides building a nuclear-powered submarine. Chidambaram allotted 2.71 billion dollars for the airforce which is still flying ageing Russian MiG jets.
The remaining funds were marked for research development and ordnance factories which are in the process of deploying India's guided and ballistic missiles that can carry nuclear warheads.
The increase was likely to be closely monitored in Pakistan which has accused India of sparking an arms race by spending almost three percent of GDP on its million-plus military forces. For the current fiscal year which ends March 31, India increased defence spending by 7.8 percent.
Also, India for the first time set aside 125 million dollars to be spent on the "urgent needs of development of border areas" such as the north-eastern Arunachal Pradesh state, which is claimed in full by China.