|India lifts social spending, reins in defense outlay
India increased defense spending by only 5 percent for the next financial year, far below previous increases with the military one of the apparent losers in the 2013/2014 budget.
Finance Minister P. Chidambaram raised defence spending to 2.03 trillion rupees (US$37.45 billion) for the fiscal year starting April 1, up 5.2 percent from 2012-13 when the budget stood at 1.93 trillion rupees, AFP reports.
In 2012-13, the increase had been 17 percent and the year before that spending was bumped up by 12 percent to fund a modernization program that has turned India into the world's biggest arms importer.
Overall budget spending for next year was increased by 16 percent, with funds focused on rural development, health and education as well as infrastructure ahead of national elections in 2014. The budget also announced tax credits of Rs 2,000 for those earning Rs 500,000. Duties on cigars and cigarettes was raised by 18 percent. Luxury vehicles and yachts will be taxed 100 percent, while SUVs will be taxed at 30 percent.
The fiscal deficit will be reduced to 4.8 percent in the 2013-2014 financial year from 5.2 percent.
The minister earmarked US$16 billion as capital expenditure – meaning spending on hardware.
Mrinal Suman, who heads the military unit of Confederation of Indian Industries national trade lobby, highlighted how the defense ministry often struggled to spend the money allocated to it.
“Budgetary allocation is not really our concern because funds can be made available when needed, but the defense ministry must spend the money given to it,'' said Suman, one of India's top procurement specialists.
He said a string of scandals involving defense contracts – most recently involving AgustaWestland helicopters bought from Italy – had slowed arms purchases because policy-makers were reluctant to take risks on new ventures.