Defence purchase exempted from Centre’s budget cuts

[IND151]

India’s defence purchase worth Rs 86,741 crore budgeted for 2013-14 fiscal will remain unaffected by the central government’s austerity measures and the 10 per cent budget cuts in non-Plan expenses announced for all departments and ministries on Wednesday. A day after the Finance Ministry issued an office memorandum on the budget cuts, under which air travel and conference in five-star hotels have been frowned upon, Defence Ministry officials said here that the intimation had clearly exempted “defence capital” expenditure, apart from salaries and pensions under the revenue expenditure.

The government had announced Rs 2.04 lakh crore as defence budget for 2013-14 of which Rs 86,741 crore was earmarked for capital expenditure. However, of the Rs 1.93 lakh crore defence budget for 2012-13, the Finance Ministry had in December last announced Rs 15,000 crore cut, of which Rs 10,000 crore cut was in the defence capital expenditure.

This decision of the government not to cut the capital expenditure of the Defence Ministry for this year, at least for the time being, may help the armed forces to firm up some of the deals for their immediate requirements, sources said.

But, key deals such the Rs 1 lakh crore combat aircraft deal with French firm Dassault Aviation for 126 of its Rafale planes may not come through this fiscal, primarily in view of the protracted contract negotiations that is in progress since March 2012.

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[[Bregs]]

MRCA deal was in any case expected to be completed when next govt. comes in