( AFP ) - India on Friday jacked up defense spending by 10 percent to $26.4 billion, the steepest hike since independence to fund a mammoth modernization program.
Finance Minister Palaniappan Chidambaram boosted expenditure for the fiscal year ending March 2009 from the previous allocation of $24 billion, saying security was of paramount importance.
India plans to spend at least $30 billion until 2012 to modernize the military with an immediate purchase of 126 war jets costing $12 billion followed by ships, submarines, artillery and other hardware in coming years.
Chidambaram set aside $12 billion for arms purchases during the current fiscal year after New Delhi promised the armed forces will not face funds shortages in the drive to upgrade materiel.
"Any further amount that is needed for the defense forces, especially for capital expenditure, will be provided," he told parliament.
The 1.23-million-strong army, the world's fourth-largest, received $9 billion to help modernize mechanized divisions, artillery and air defense units.
Chidambaram also set aside millions of dollars in addition to the annual defense outlay to set up institutions and schools for families of servicemen and women.
He committed $1.85 billion to the navy which is shopping for six submarines in addition to the six it bought last year from Armaris and European defense firm MBDA for $3 billion.
The 137-ship navy is also in advanced negotiations to buy eight long-range reconnaissance planes from either US-based Boeing or the European consortium EADS for $2 billion, besides building a nuclear-powered submarine.
Chidambaram allotted $2.71 billion for the air force which is still flying ageing Russian MiG jets.
The remaining funds were marked for research development and ordnance factories which are in the process of deploying India's guided and ballistic missiles that can carry nuclear warheads.
Defence Minister A.K. Antony hailed the budget. "The modernization drive would continue full steam," he said.
"The armed forces had been hit by a resource crunch in the 1990s and now time has come to equip them with latest weapons and systems to ensure that country's borders are safe.
"The modernization would be across the board in all three services - army, navy and air force - as well as in country's strategic programs like missiles," he told reporters.
However, senior commanders privately said the funds may not suffice to meet the long-term modernization program.
"The 10 percent increase will barely offset our nearly five percent inflation rate and 40 percent funds will go for the upkeep of assets and our existing manpower," a senior infantry commander said.
The unprecedented increase was likely to be closely monitored in Pakistan which has accused nuclear rival India of sparking an arms race by spending almost 3 percent of GDP on its million-plus military forces.
For the current fiscal year which ends March 31, India increased defense spending by 7.8 percent.
Also, India for the first time set aside $125 million to be spent on the "urgent needs of development of border areas" such as the northeastern Arunachal Pradesh state, which is claimed in full by China.