For the first time in India's history, its defence budget has exceeded Rs.1 lakh core, increasing from Rs.96,000 crore in 2007-08 to Rs. 105,600 crore in the current budget. The fiscal deficit for 2008-09 has been estimated to be Rs.133,287 crore, which is less than 2 per cent of GDP. Since the last few years, India's defence budget has been hovering around 2.5 per cent of its GDP. It is for the first time in many years that the defence budget has reached so low in terms of GDP. Experts argue that considering India's security concerns, it must invest a minimum of 3 per cent of its GDP in defence.

The present increase in the defence budget amounts to 10 per cent, as compared to last year, when the increase was close to 11 per cent. Given the steady inflation rate of 5 to 6 per cent, it could be argued that the Government has essentially maintained status quo. The Defence Ministry should welcome the budget because status quo will help them continue with their present planning and procurement efforts. Due to the farmers' issue, it was felt in some quarters that the Finance Minister would be forced to reduce the defence budget to balance his books.

A glance at the budget allocation figures under 'major heads', indicates that the Government has increased the allocation of funds in every area. The interesting aspect of this budget is that it has also addressed some minor, but important issues. In addition to an increase in the budget for the National Cadet Corps (NCC), the Government has also proposed to provide Rs.2 crore for each of the 22 Sainik Schools in the country. Both these steps are welcome. This could help attract the youth to join the armed forces. The Finance Minister also mentioned that once obligations on account of the Sixth Pay Commission become clear, he would request the Thirteenth Finance Commission to revisit the roadmap for fiscal adjustment. This indicates that any likely increase in pay and emoluments will not impact the budget per se. The Defence Ministry hopes that the Sixth Pay Commission will help limit the high attrition rate in the armed forces.

Another important feature of this budget is the allocations made for the first time for the Armed Forces Tribunal. In December 2007, the Parliament had passed a bill to set up a tribunal to adjudicate on disputes and complaints of personnel of the armed forces with respect to commissions, appointments, enrolment, and conditions of service. Over a period of time, with changing human rights standards and societal values, it has become necessary to remove the deficiencies in military law. An increasing number of cases of suicides and killing of superiors has been reported from the armed forces. The establishment of the Tribunal could help resolve such problems, even if partially.

For defence research and development (R&D), the budget allocation has increased from Rs.629 crore to Rs.660 crore. This marginal increase indicates that we do not have an ambitious plan for the future development of military technology. Today, major military powers invest huge amounts for research in strategic technologies like directed energy weapons, robotics, and nanotechnology. India has undertaken some investment in these areas, but we are likely to lag behind if major investments are not made. There is a need to provide substantial sums for research and development; otherwise India will continue to depend on arms purchase from abroad in the future as well.

A major aspect that defence experts expected the budget to reflect was the allocation of money for a 'Space Command'. India aims to convert its air force into an aerospace force, which is the need of the hour. After the Chinese anti-satellite test last year, the US recently showcased its strength in the area of missile defence and anti-satellite technology, by shooting down one of its own satellites. By making a separate budgetary provision for its aerospace command, India could also have provided a signal about its arrival on the scene.

Currently, Pakistan's military budget is around four per cent of its GDP and the Chinese military budget is also believed to be within the same range. Over the years, the Indian defence establishment has handled both these threats successfully, with whatever budget has been given to it. It needs to be emphasized that the Defence Budget should not be seen through the prism of GDP. What is important is a realistic threat-assessment, and investment in the defence sector to address these threats. Looking at the present threat and the burden it places on the armed forces to tackle non-military issues like disaster management and insurgency, any increase in the budget would help them enhance their efficiency. However, this year the farmers' issue dominated and in this debate of 'guns vs. bread' it can be said that neither party lost.