In its first budget, the new government of Prime Minister Narendra Modi has promised a new era of fiscal prudence and greater opportunities for foreign investors in key sectors of the economy, including defense.
Finance Minister Arun Jaitley announced an increase in the permitted level of foreign direct investment in the defence sector to 49 per cent from 26 per cent.
To ensure that the military, which has repeatedly warned of outdated and inadequate equipment, has its way on the modernization drive, the government has budgeted Rs. 94,588 crores, Rs. 5000 crore more than what was sanctioned by the previous government in February in the interim budget this year. Overall defence spending has gone up by Rs. 26,000 crores to Rs. 2.29 lakh crore over the last fiscal.
Mr. Jaitley also said that a war memorial will be created in the heart of Delhi near India Gate at a cost of Rs. 100 crores. This, he added, would be supplemented by a War Museum.
The minister also said that 1,000 crores will be used to implement the one-rank-one-pension scheme, which guarantees that soldiers of the same rank and duration of service will receive the same pension, irrespective of the year of their retirement.