India Increases Defence Budget To $34 billion

India’s Finance Mister stated that the country’s defence budget for 2011-12 has been increased up to Rs147,3 billion.($34 billion).

The minister was presenting the budget for the next year when he marked the 4% increase from the outgoing allocations of the Rs147.3 billion. The capital expenditure for defence in 2011-12 will be increased to Rs691 billion from Rs60 billion in 2010-11. The military’s budget has boosted up to 1,65 trillion rupees ($36 billion) from last year’s 1,47 trillion rupees. The rise comes, because of the agreement between India and Pakistan to resume peace talks which were suspended more than two years ago. The reason for the end of the negotiations was because of a gunmen attack which ended with 166 civilian casualties in Mumbai.

According to international consultancy company KPMG, New Delhi will sign contracts worth approximately $112 billion by 2016. This year’s defence budget increase comes from the finalization of a big-ticket deal to procure 197 light helicopters, 145 ultra-light howitzer artillery guns and 127 combat aircraft.

The budget doesn’t allow the government to decrease. the fuel prices, which automatically denies the state-run oil firms from any tax reliefs. The diesel, kerosene and cooking gas prices are set by the federal government, which partly compensates oil firms for their losses. India’s inflation is at around 8% and is currently the highest of the Asian economics.
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