NEW DELHI - The 34 percent hike in the defence budget for 2009-10 is driven more by the increased salaries granted to government employees on a pay panel’s recommendations than by the armed forces’ need for capacity building, experts say.

The hike of 34 percent over last year is misleading. This is principally meant to pay for the increased salaries recommended by the Sixth Pay Commission,” Commodore (retd) Uday Bhaskar, the director of the National Maritime Foundation, told IANS.

“The real challenge is to convert fiscal allocations into appropriate capacity building,” Bhaskar maintained, pointing out that the armed forces had returned Rs.7,000 crore of the Rs.48,007 crore allocated for the purchase of military hardware during 2008-09.

“If we do not address this, we cannot pre-empt another (1999) Kargil (conflict with Pakistan) or (the 26/11) Mumbai (terror attacks), Bhaskar, a former deputy director of defence ministry-sponsored think tank Institute for Defence Studies and Analyses, contended.

Finance Minister Pranab Mukherjee presented the budget for 2009-10 in the Lok Sabha Monday, leaving defence expenditure for the fiscal unchanged from the Rs.141,703 crore ($28 billion) allocated in the interim budget earlier this year - which was a hike of 34 percent over the previous year.

Of the total defence budget, the operating expenditure of the three services and other departments has been pegged at Rs.86,879 crore. This leaves just Rs.54,824 crore for capital expenditure on modernising the military.

Of the two heads, the operating expenditure has been increased - in comparison to last hike of less than 7 per cent - by a whopping 50.85 per cent or Rs.29,286 crore largely due the hike in salaries and allowances.

At the same time, capital expenditure has declined 14.20 percent or by Rs.6,817 crore, leading to analysts sounding alarm bells.

This in a situation in which the armed forces are on a modernisation drive. The shopping list includes a variety of weapons and systems that include combat jets, heavy artillery guns, armoured vehicles, radars, missiles and naval vessels. Thus, the requirement for new equipment is on the rise while less money is available for this. More worrisome is the return of money allocated for purchases.

This (returning of money) represents a serious systemic problem as the finance ministry allocates but the defence ministry is unable to spend it. This is a very serious trend and can erode the capacities of the armed forces, Bhaskar pointed out.

As for the ex-servicemen, they are extremely upset at the government’s response to their “one-rank-one-pension” (OROP) demand.

We are happy the pension for jawans (soldiers) and junior commissioned officers (JCOs) has been increased but it is nowhere close to our demand as retired officers have been ignored,” said Commodore (retd) Lokesh Batra, a member of the Indian Ex-servicemen’s Movement.

“If it has not been announced in the budget, it means the OROP demand for officers has been ignored,” Batra added.

Around 13,000 armed forces veterans have returned their medals this year protesting against the government’s apathy to their OROP demand that irrespective of the date on which an officer or soldier retires, he or she should get the same pension as those who had earlier retired in the same rank.

Mukherjee, in his budget speech, said: The government has decided to substantially improve the pension of pre-1.1.2006 defence pensioners below officer rank (PBOR) and bring pre-10.10.1997 pensioners on par with post 10.10.1997 pensioners. Both these decisions will be implemented from 1st July 2009, resulting in enhanced pension for more than 12 lakh jawans and JCOs.