NEW DELHI - Maintaining a ‘threshold has been crossed’ with the Mumbai terror attacks, the Indian government hiked the allocation for defence by 34 percent to Rs.141,703 crore (Rs.1.417 trillion) in the interim budget for 2009-10 that External Affairs Minister Pranab Mukherjee presented in the Lok Sabha Monday.

‘We welcome the budget,’ Defence Minister A.K. Antony said of the allocation, which is nearly 15 percent of the total interim budget of Rs.953,231 crore for the fiscal beginning April 1.

‘We are going through tough times,’ Mukherjee said while explaining the rationale for the hike.

‘The Mumbai terror attacks have given an entirely new dimension to cross-border terrorism. A threshold has been crossed. Our security environment has deteriorated considerably,’ said Mukherjee, presenting the budget on behalf of Prime Minister Manmohan Singh, who is recovering from coronary bypass surgery.

The interim budget was presented as the government in now at the fag end of its tenure and general elections are due in April-May. The budget is normally presented on the last day of February.

Of the allocation for the fiscal beginning April 1, plan expenditure has been pegged at Rs.86,879 crore against Rs.73,600 crore for the financial year just ending.

This includes Rs.54,824 crore for capital expenditure as against Rs.41,000 crore in the revised estimates for 2008-09.

In real terms, however, the budgetary hike works out to only 23.6 percent as the revised expenditure for 2008-09 has been placed at Rs.114,600 crore against the allocation of Rs.105,600 crore.

As in the past, the 1.1 million strong Indian Army has received the lion’s share of 41 percent or Rs.58,648 crore, with the Indian Navy being allocated Rs.8,322 crore and the Indian Air Force Rs.14,318 crore.

Interestingly, the army’s allocation is even greater than the Rs.54,824 crore set aside for capital expenditure for all three services.

And, in the case of capital expenditure, the bulk of this - almost Rs.20,000 crore - has been set aside for the air force, against Rs.17,767.95 crore for the army and Rs.11,873.73 crore for the navy.

One wonders just how much of this will actually be spent by the time fiscal 2009-10 ends on March 31, 2010 since the armed forces have returned Rs.7,000 crore of the Rs.48,007 allocated for capital expenditure for 2008-09.

For the army, the budgetary hike - minus the allocation for capital expenditure - works out to a little less than Rs.10,000 crore over the revised estimates of Rs.48,195 crore. The original allocation for the army in the 2008-09 proposals was Rs.36,270 crore.

For the navy, the hike is a mere Rs.288 crore over the revised estimates of Rs.8,034 crore for the fiscal just ending but a rise of Rs.901 crore over the original allocation.

For the air force, the hike works out to Rs.1,109 crore over the revised estimates Rs.12,199 crore for the closing fiscal against an original allocation of Rs.10,855 crore.

Of its allocation, the army will be spending a staggering Rs.36,081 crore or 64 percent on pay and allowances. The navy has set aside Rs.2,850 crore or 34 percent on this count and the air force Rs.4,880 crore or 34 percent.

Taken together, the three services will see Rs.43,811 crore or nearly 54 percent going toward pay and allowances.

The budget has also allocated Rs.21,790 crore for pensions, Rs.4,757 for the Defence Research and Development Organisation (DRDO) and Rs.842 crore for defence ordnance factories.