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Sunday, 18 March 2012

From Today's Papers - 18 Mar 2012







http://www.tribuneindia.com/2012/20120318/nation.htm#3
New warships, aircraft to take up bulk of defence spending
Ajay Banerjee
Tribune News Service

New Delhi, March 17
India’s growing defence budget will focus on new equipment for the three services, look to adding new warships and aircraft and paying off the existing projects related to ships.

Yesterday, when Union Finance Minister Pranab Mukherjee announced the Budget, he allocated Rs 79,579 crore for capital expenses.

The allocation is Rs 10,380 crore more than the Rs 69,199 crore allocated last year.

Capital expenses are targeted specifically to purchase weapons, war planes, warships, equipment, for naval dockyards and special classified projects.

Just a shade more than 40 per cent of the capital outlay has been set aside for aircraft and aero-engines. A sum of Rs 32,057 crore has been allocated for the purchase of helicopters and aircrafts for the Army, Navy and Air Force.

The IAF will get Rs 23,701 crore which is directed at part payments for the heavy lift transporter - the C-17 - being imported from the US; the Mi-17-V5 series of armed helicopters from Russia; and for the upgrade of 49 Mirage-2000 combat jets.

The first of the transporters from the US is expected next year, while in case of the helicopters, the first lot of some 21 machines was inducted in February this year.

The payment of all such deals has been staggered. The first two of the Mirage 2000 have already been sent to the original manufacturer Dassault Aviation in France.

The Army will also get Rs 3,052 crore for its aviation wing which is largely deployed in the mountains.

A sum of Rs 13,617 crore has been set aside to pump in money for under-construction ships like the seaborne aircraft carrier at Kochi Shipyard, the stealth frigates being produced in Russia and submarines being produced at Mazagon Docks Mumbai.

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Gold duty hike: Jewellers down shutters for 3 days
Shiv Kumar/TNS

Mumbai, March 17
Jewellers and bullion traders across the country, including Delhi and Mumbai, today downed shutters for three days to protest the government’s decision to double import duty on gold and levying excise on unbranded jewellery.

Finance Minister Pranab Mukherjee had proposed doubling import duty on gold to 4 per cent. The government had in January imposed a 2 per cent import duty on gold.

Most bullion markets and jewellery showrooms remained closed in major cities, All India Sarafa Association president Sheel Chand Jain said. He said the association had written to Finance Minister Pranab Mukherjee to rollback the proposals. Analysts say the new duties could result in gold imports falling by as much as 20 per cent.

“Gold prices went up by Rs 40 per gram as soon as the Finance Minister’s proposals came in on Friday,” said Anand Zaveri, a gold jeweller in suburban Mumbai. “The demand for jewellery will certainly fall because of the higher duties,” he added.

Showrooms in Mumbai’s Opera House and Zaveri Bazaar, the epicentre of the jewellery trade in the country, downed their shutters.

Smaller jewellers also joined in to protest the government’s decision to impose 1 per cent excise duty on unbranded gold jewellery. According to those in the trade, these measures were being implemented to favour corporate houses selling branded jewellery.

“High import duties will only give rise to smuggling and affect government revenues in the long run,” said Prithiviraj Kothai, president of the Bombay Bullion Association that took out street protests.

http://www.onlinenews.com.pk/details.php?id=190320
Indian militray plays catch-up but China a long march ahead

NEW DELHI: Modernization of the over 13-lakh Indian armed forces will continue in a steady albeit sluggish manner, with the defence outlay being hiked to $39 billion to cater for some major fighter, aircraft, helicopter and howitzer deals to be inked in the coming fiscal, Indian media analysis on Saturday.

But two major worries remain. One, India’s budgeted defence expenditure still remains just 1.9% of the projected GDP for 2012-13, much less than the 3% being demanded by the armed forces and strategic experts for several years to effectively deter both China and Pakistan. An assertive China, for instance, recently hiked its official defence budget to over $100 billion, Times of India said.

Two, the revenue expenditure (day-to-day costs and salaries) pegged at Rs 1,13,829 crore for the coming fiscal continues to far outstrip the capital one for new weapons, sensors and platforms at Rs 79,579 crore. There is simply no indication the much-touted aim to "transform’’ the military into a lean, mean fighting machine is anywhere on the horizon. Moreover, Indian defence ministry has been forced to return Rs 3,055 crore of unspent capital funds. Indian defence minister A K Antony admitted he had expected more for his ministry this time but he took solace at the FM declaring that additional money would be provided if needed.

For the record, the 2012-2013 defence outlay represents a 17.63% hike over last year’s budgetary allocation of Rs 1,64,415 crore. But if revised estimates of 2011-2012 are taken, it becomes a mere 13.14% jump.

Capital expenditure, in turn, has registered a more robust 20.3% hike from last year’s revised estimate of Rs 66,144 crore. This will, however, be just enough to keep the modernization on track, without any surges, since a major chunk of it will also go for already contracted weapon systems.

Army, in particular, is grappling with "operational gaps’’ in artillery guns, air defence weapons, night-vision capabilities and aviation. IAF and Navy, too, are making do with inadequate aircraft, helicopters, submarines and trainers.

A mega project on the anvil is the almost $20 billion MMRCA (medium multi-role combat aircraft) programme to acquire 126 fighters for IAF, with the final commercial negotiations for the French Rafale jet now in progress.

Even as IAF also waits for the over Rs 3,000 crore deal for 75 Swiss Pilatus PC-7 turbo-prop aircraft to train its rookie pilots, Army is desperate to acquire 145 M-777 ultra-light howitzers from the US for $647 million, its first-ever acquisition of 155mm guns since the infamous scandal in the mid-1980s completely derailed its artillery modernization plans.

http://timesofindia.indiatimes.com/india/IAF-chiefs-four-day-Bangladesh-trip-begins-today/articleshow/12310846.cms
IAF chief’s four-day Bangladesh trip begins today
NEW DELHI: In consonance with India's policy to further step-up bilateral military cooperation with Bangladesh, IAF chief Air chief marshal (ACM) N A K Browne will leave for a four-day visit to Dhaka on Sunday.

ACM Browne will call on Bangladesh President Zillur Rahman and PM Sheikh Hasina Wajed and also hold talks with the three Service chiefs General Mohammed Abdul Mubeen, Air Marshal S M Ziaur Rahman and Vice-Admiral Zahir Uddin Ahmed during the visit.

"A wide range of bilateral issues on the ongoing defence cooperation between the two countries will be discussed. Further areas of defence cooperation, including joint exercises and training programmes, will also be outlined,'' said an official.

India remains wary of China's deep strategic inroads into Bangladesh, which includes a direct rail-road link to the port city of Chittagong and its help in constructing the Sonadia deep-sea port at Cox's Bazaar.

India has actively worked towards bolstering ties with Bangladesh over the last three-four years, with one of the main objectives being the need for both countries to `resolutely' tackle terrorism together.

Since 2009, India has also been holding direct Army-to-Army staff talks with Bangladesh to chalk out the programmes to be undertaken by the two forces in the future. The importance of the talks can be gauged from the fact that India has similar staff talks with just a handful of countries, which include the US, the UK, Israel, France, Japan, Australia, Malaysia, Indonesia and Singapore.


http://www.business-standard.com/india/news/army-modernisation-slow-navyair-force-push-ahead/468125/
Army modernisation slow Navy & Air Force push ahead
After cost inflation, this year's allocation will buy significantly less than last year's
Ajai Shukla / New Delhi Mar 18, 2012, 00:40 IST

The defence budget for 2012-13, presented in Parliament on Friday, confirms the Indian Army’s degeneration into a low technology, manpower-intensive force that spends most of its money on day-to-day running. While the Navy and Air Force are built up into modern, space-age forces.

Also evident from the figures is that inflation and the slide in the value of the rupee has caused the military’s modernisation budget to be effectively reduced for the first time in decades. More worryingly, India’s dependence on foreign weaponry could continue with R&D (research and development) expenditure slashed in real terms.
This gloomy conclusion was not immediately evident when Finance Minister Pranab Mukherjee announced in Parliament yesterday the government had allocated Rs 1,93,407 crore for the military in 2012-13, a rise of 13.15 per cent over the current year’s revised allocation of Rs 1,70,937 crore. The capital budget, which is the main source for the procurement of new weaponry, was raised by a seemingly healthy 15 per cent from Rs 69,198 crore last year, to Rs 79,578 crore for 2012-13.

But a different picture emerges when one translates the capital budget into US dollars, import-dependent India’s primary currency for arms purchases. Last year’s capital budget (at Rs 44.45 per dollar on Apr 1, 2011) was $15.56 billion. This year’s capital budget (conservatively assuming an exchange rate of Rs 50 per dollar) translates into $15.91 billion.

“Factor in cost inflation, which is roughly 10-15 per cent per annum for weapons systems, and this year’s capital budget will buy significantly less than last year’s,” said G Balachander of the Delhi-based Institute for Defence Studies and Analysis.

The Defence R&D Organisation (DRDO), India’s main source of indigenous defence systems, must also make do with less. In rupee terms, the R&D allocation of Rs 4,640 crore for 2012-13 just about matches last year’s R&D spend of Rs 4,628 crore. But, given inflation and the falling rupee, and the high percentage of foreign parts in DRDO-built weaponry, the DRDO’s spending power will be significantly eroded in the coming year.

Another worrying issue is the Army’s slowdown in modernisation. The Navy will spend almost twice as much in the coming year on force modernisation as it will on manpower and running expenses (capital spend of Rs 23,882 crore, vis-à-vis revenue spend of Rs 12,548 crore).

The IAF will be only slightly lower (capital spend: Rs 28,503 crore, vis-à-vis revenue spend of Rs 17,705 crore). In contrast, the Army will spend only Rs 13,803 crore (half the capital expenditure of the much smaller Navy and IAF); while spending Rs 78,114 crore on running expenditure (roughly four times as much as the IAF and six times more than the Navy).

“The Army has always been a manpower-intensive force, given our mountain borders. But its fighting capability will be seriously eroded if modernisation is choked. The Army badly needs new artillery, the helicopter fleet is obsolescent, there are hardly any serviceable attack helicopters, and night fighting capability remains a gaping hole. Most importantly, the infantry, which is operationally committed around the year, must be modernised urgently,” said Lt Gen Pradeep Khanna, who retired last year as the chief of the Army’s southern command.

A key reason for the IAF emerging as the biggest beneficiary of the capital budget is the expected signing of a contract this year for 126 Rafale medium multi-role fighters. Normally, 15 per cent of the overall price is paid at the time of signing; with the Rafale contract expected to be for Rs 70,000 crore, the IAF will pay some Rs 10,000 crore this year, with the balance distributed over the coming decade. The IAF is also making annual payments for the earlier contracts for the American C-130J Super Hercules and C-17 Globemaster III transport aircraft. A contract could also be signed this year for 197 light utility helicopters, and for urgently needed trainer aircraft for rookie IAF pilots.

Similarly, the Navy is budgeting for the impending contract for Project 17A frigates that will be built in Mazagon Dock Ltd, Mumbai (MDL) and Garden Reach Shipbuilders & Engineers Kolkata (GRSE). It is also making annual payments for several ongoing warship programmes: Project 28 anti-submarine corvettes being built by GRSE; and Project 75 Scorpene submarines, and Project 15A and 15B destroyers being built at MDL. In addition, it is paying Boeing for the P8I Poseidon multi-mission maritime aircraft (MMA) that are being built in the US.

On an average, more than two-thirds of any year’s capital budget is pre-committed towards annual installments for defence contracts concluded earlier. Weapons platforms are often paid for over a decade or so. Just about 30% of any year’s capital budget goes towards new contracts.

Earlier this month, China had announced that it would spend $106 billion (670 billion Yuan) on its military in 2013. Defence experts estimate that Beijing actually spends 50-100% more than the declared figure. Like India, China too has steadily increased defence spending in line with its economic growth.

http://indiatoday.intoday.in/story/defence-plan-on-track-despite-economic-slowdown/1/178174.html
Defence plan on track despite economic slowdown


Read more at:
http://indiatoday.intoday.in/story/defence-plan-on-track-despite-economic-slowdown/1/178174.html
Finance Minister Pranab Mukherjee has ensured that defence modernisation plan would not go off track in the wake of economic slowdown as funds to buy new equipment and build assets for the three services have been increased by 15 per cent.

Overall, the defence spending will go up by 17 per cent as the total allocation for the sector has been enhanced to Rs.1,93,407 crore from Rs.1,64,415 crore last year. Despite the jump, defence spending will continue to account for only 1.9 per cent of the GDP.

The hike has been given despite the fact that Rs.3,055 crore of last year's capital budget of Rs.69,198.81 - which goes for acquisition - remained unspent.

The defence capital budget, aimed at catering to big ticket deals that are lined up for signing next year, has been enhanced to Rs.79,578.63 crore.

Out of the three services, only the navy has exhausted its capital allocation of Rs.13,008.74 crore and went on to spend around Rs.3,000 crore more. But the army and the air force surrendered around Rs.3,000 crore each.

The budget statistics establish concern about the army's modernisation plan coming to a grinding halt. Its plan to buy new artillery guns has been left in a limbo and other projects are also running behind schedule. Just as in the previous year, this year too the army has been allocated substantial amount to buy new aircraft and aero engines.

If it got Rs.2291.60 crore last year for aircraft and aero-engines, the amount has been enhanced to Rs.3,052.52 crore despite the fact that only Rs.1,711.8 crore were actually spent in 2011-12.

The army has an ambitious plan to considerably strengthen its air wing. The project has even led to a confrontation with the Indian Air Force (IAF).

The IAF's own plan to add new aircraft is delicately poised. It has not been able to buy basic trainers despite selecting Swiss company Pilatus as the lowest bidder around a year back.

The IAF is desperately seeking these trainers as its pilot training programme is facing serious problems because of shortage of aircraft. Lives of rookie pilots are at risk as they are being trained directly on complex jets, rather than honing their skills on basic aircraft.


Read more at:
http://indiatoday.intoday.in/story/defence-plan-on-track-despite-economic-slowdown/1/178174.html

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