Dawn July 7th 2009

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NEW DELHI, July 6: Indian Finance Minister Pranab Mukherjee unveiled a populist budget on Monday but kept intact a 34 per cent hike for defence he had announced in the interim prepoll allocation in February.
Total budget expenditure is expected to cross $210 billion, an all-time record. The short- and medium-term fallout of the proposals will be political, with the aim to undermine the parliamentary left in West Bengal, where coming state elections are a high priority for the government, and to better arm the paramilitary forces to crush an expanding Maoist revolt in much of the country’s heartland.

While India’s defence spending would grow to $29.39 billion as it moves to modernise weapons systems and overhaul its security forces after last year’s Mumbai attacks exposed major gaps, Mr Mukherjee said the country would spend $562 million exclusively for boosting border security and modernising its police force.

Prime Minister Manmohan Singh said the security modernisation programme was crucial to the unhindered development of Asia’s thirdlargest economy.

Significant augmentation in the strength of the paramilitary forces is being done. This calls for more investment in creating the necessary infrastructure, Mr Mukherjee said.

Within the main allocations, the army is looking at helicopters, artillery, armour and infantry, while the air force is on the verge of buying 126 jets worth almost $12 billion and the navy wants an aircraft carrier.