The modernization budget of the armed forces has been slashed by around Rs 10,000 crore in a major jolt to them in the New Year. The cut is contrary to defence minister A K Antony’s earlier promise of a hike in the defence budget to cater for the threat of the expansive China-Pakistan military nexus.
The finance ministry conveyed the decision on the Rs.10,000 crore cut in the capital acquisitions for the army, navy and the IAF to the defence ministry, arguing that fiscal adjustment was necessary since the economic situation was grim, said sources.
The move will lead to a major slowdown in the ongoing acquisition projects—ranging from aircraft and helicopters to howitzers and missiles. It also makes it clear that the already much-delayed $20 billion MMRCA (medium multi role combat aircraft) project to acquire 126 fighters will not be inked anytime before March 31.
IAF had been assured an additional Rs 10,000 crore to cater for the first instalment of the MMRCA project—under which final commercial negotiations are underway for French Rafale fighters—if inked within this fiscal.
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