New Delhi, July 10 (IANS): India Thursday hiked its defence budget by 12.43 percent, with Finance Minister Arun Jaitley allocating Rs.229,000 crore ($38.15 billion) in the budget proposals for 2014-15 that he presented in the Lok Sabha.
This is Rs.25,373 crore over the Rs.203,672 crore allocated for 2013-14 and Rs.5,000 crore over the Rs.224,000 crore allocated in the interim budget for 2014-15 presented ahead of the April-May general election.
“There can be no compromise with the defence of our country. I, therefore, propose to allocate an amount of Rs.2,29,000 crore for the current financial year for defence,” said Jaitley, who is also the defence minister.
Simultaneously, the capital outlay for the defence sector has been increased to Rs.94,588 crore -- Rs.5,000 crore more than the Rs.89,588 crore proposed in the interim budget.
As usual, the 13 lakh-strong Indian Army gets the lion's share of Rs.92,669 crore, followed by the Indian Air Force with Rs.20,506 crore and the Indian Navy with Rs.13,975 crore.
Jaitley also allocated an additional Rs.1,000 crore for implementing the demand for One Rank One Pension that had been accepted by the previous government.
And, bending to a long standing demand from India Inc, Jaitley hiked the cap in FDI in the defence sector from 26 percent to 49 percent, with the proviso that the management would remain in Indian hands.
“Currently we permit 26 percent FDI in defence manufacturing. The composite cap of foreign exchange is being raised to 49 percent with full Indian management and control through the FIPB route,” Jaitley said.
Noting that it would be a “privilege for the nation” to erect a befitting memorial to the armed forces personnel who had laid down their lives in the service of the nation, Jaitley said: “I am happy to announce that a War Memorial will be constructed in the Princes Park (in the capital). It will be supplemented by a War Museum. I am allocating a sum of Rs.100 crore for this purpose.”
Of the total allocation, Rs.100 crore has been set aside for a Technology Development Fund to provide necessary resources to public and private sector companies, including SMEs, as well as academic and scientific institutions to support research and development of defence systems that enhance the country's cutting-edge technology capability.
The fund was first proposed in 2011 but “beyond the announcement, no action was taken”, Jaitley said.