NEW DELHI — India has failed to spend all the defense money allotted last year in the Capital Head, under which new weapons are bought, while the new budget represents a 10 percent decline in dollar terms.
The budget proposals presented by Finance Minister Arun Jaitley Monday to the Indian Parliament reveals that nearly US $1.47 billion has not been spent on the Capital Head and the money was diverted to the Revenue Head of the Ministry of Defence for salaries and purchase of stores.
In a rare occasion in India's budget-making, Jaitley did not even reference defense spending in his speech.
With a total allocation of 2.58 trillion rupees this year compared with 2.52 trillion rupees last year, that represents a hike of 2.3 percent. However, the current exchange rate is about 68 Indian rupees to one US dollar, while last year the exchange rate was about 60 per dollar, thus resulting in less purchasing power.
Military officials said they were waiting for the second full budget of the ruling Narendra Modi government but are disappointed with the lack to attention to the defense sector.
One Indian Air Force official said that unlike the election promise in 2014, the Modi government has not allocated sufficient resources to meet the long-term needs of a military preparing to fight wars simultaneously on the Pakistan and China borders.
In addition, money allocated last year has not been used.
"Despite defense projects worth $20 billion in the last stages of negotiations, money was left unspent because of delays by bureaucrats in the Ministry of Defence," said defense analyst Nitin Mehta.
"The Modi government came to power in 2014 riding on the slogan less government and more governance," Mehta said.
With a marginal hike in spending, especially for the capital projects, it will be difficult to fund the projects already in the last stages of procurement.
The projects, which are in the last stages of procurement, include:
• Purchase of 36 Rafale aircraft from France on a government-to-government basis.
• Purchase of 473 software-defined radios from Rafael of Israel.
• Acquisition of 56 C-295 transport aircraft from Airbus, which will be partly built by the Airbus-Tata combine under the Buy and Make India category.
• Purchase of six A330 tanker aircraft from Airbus.
• Purchase of 280 engines for Jaguar aircraft from Honeywell of the United States.
• Acquisition of an additional 35 basic trainers from Pilatus of Switzerland.
• Purchase of five units of Russian-made S-400 Triumf advanced air defense systems from Russia.
• Purchase of three C-130J transport aircraft and six C-17 Globemaster aircraft and additional four P-8I aircraft from the US.
• Acquiring 145 M777 ultra light howitzers from the US subsidiary of BAE Systems.
• Purchase of 321 launchers and 8,000 Spike anti-tank guided missiles from Israel.
• Purchase of 12 mine counter-measure vessels.
• Acquiring 16 naval multirole helicopters from Sikorsky.