Budget 2013: India hikes military spending by 14 percent

  India on Thursday hiked its military spending to Rs 203,672 crore (Rs 2.03 trillion/USD 37 billion), an increase of five percent over the Rs 193,407 crore outlay for 2012-13 but an increase of 14 percent in real terms ,setting at rest speculation that the country's slowing economic growth could affect its military acquisitions.Of the total defence outlay for 2013-14, Finance Minister P Chidambaram, who presented his budget in Parliament in the morning, said Rs 86,741 crore will be for capital expenditure in defence sector.

Earlier this month, Defence Minister AK Antony had told reporters in Bangalore that "India is not an island. The world economy is going through a tough time, we will have to cut down."He had, however, said there will be no cuts in "priority areas" and the "operational 

preparedness" of the military will not be affected. Nuclear-powered India and China have a territorial dispute. China's military build-up along its frontier as well as competing interests of India and China in the South China Sea and Indian Ocean are frequent sources of stress in their bilateral ties. Since concerns last year about India's credit rating and budget deficit, India has been curbing spending and it was speculated the austerity drive could hit the government's spending for defence and social sector programme.

According to the Stockholm International Peace Research Institute, India received nine percent of global arms transfers from 2006 to 2010, making it the world's leading importer of weapons.

New Delhi had initially budgeted about 1.93 trillion rupees ($36 billion) for defence spending in the financial year to March, an increase of 17 percent from 2011-2012 when spending was hiked by another 12 percent. The budget presented by Chidambaram  pegs fiscal deficit of Asia's third largest economy at 4.8 per cent of GDP for 2013-14, as against 5.2 per cent in 2012-13 (the financial year which ends on March 31 this year).In his budget speech, Chidambaram said India faces the challenge of getting back to its potential growth rate of 8 per cent.
Only China and Indonesia are growing faster than India, he added.