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February 8, 1999
ASSEMBLY POLL '98
COMMENTARY
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ELECTIONS '98
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Defence allocation likely to come down 4%
Tara Shankar Sahay in New Delhi
Despite the demand by all three wings of the armed forces for a sizeable increase in the budgetary allocation for defence for 1999-2000, it is likely to be only Rs 480 billion, a modest increase of 8 to 10 per cent, according to senior defence ministry officials. In real terms, this will actually mean a 3-4 per cent reduction from the 1998-99 Budget.
The officials said the 1998-99 defence budget had disappointed the three services. So this year they are expecting a substantial increase.
But, the officials explained, three "constraints" prevent such an increase:
- Prime Minister Atal Bihari Vajpayee has admitted to a financial crisis, with export earnings falling far short of the target. Besides, Finance Minister Yashwant Sinha has given enough indications that the next Budget will be harsh. This means the axe may fall on non-developmental expenditure, defence included.
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With India's threat perception undergoing a qualitative change after the Pokhran II nuclear tests, any immediate large-scale investment on modernisation of conventional forces will send out a wrong signal. Also, with Vajpayee "going the extra mile" to try and break the impasse in Indo-Pakistan relations, and friendly "noises" being made on the Sino-Indian front, the government would be loathe to disturb the "carefully crafted equilibrium" by increasing the defence budget.
- With the political arithmetic in the country becoming uncertain, the Bharatiya Janata Party-led coalition would like to play safe by not disturbing any allocations on the developmental front. In fact, the defence ministry has already issued internal orders not to make any revised estimates for 1999-2000. All departments under the ministry have been asked to stick to the budget estimates made in February 1998.
Against this backdrop, the officials said, a massive hike in the defence budget is unlikely, even though Defence Minister George Fernandes himself wants it. Consequently, the 15-year Indo-Russian defence co-operation agreement has also slowed down. Other than the Russian T-90 tanks, no major purchase of military hardware is likely in the near future.
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