Govt may cut down on defence budget: PM

Discussion in 'Defence & Strategic Issues' started by Shadow, Nov 25, 2013.

  1. Shadow

    Shadow Regular Member

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    India must strive to develop "comprehensive national power" to tackle the challenges posed by the shift in global strategic focus towards the Asia-Pacific region, marked by jostling between the US and China, as well as the intense competition among nations in the security arena despite growing inter-dependence triggered by globalization.

    This, in short, was Prime Minister Manmohan Singh's message to the country's top military brass on Friday. But he also warned that India might have to trim its defence budget due to the economic slowdown over the last two years. The armed forces will have to exercise greater "prudence" and "cut our coat according to our cloth" in their defence acquisition plans.

    "While we must take into account the capabilities of our adversaries, we have to plan our long-term acquisition on the assumption of limited resource availability. This is an exercise that has to be done with a high degree of priority and urgency," he said, addressing the combined commanders' conference.

    But the major chunk of his speech, the last before his government completes its term, was devoted to the impending strategic challenges ahead. The PM said while globalization has induced growing and complex inter-dependencies among states and multinationals on the economic front, it has also nurtured "intense competition and rivalries" in the security domain.

    "Managing this contradictory tenor, highlighted by the global surveillance mounted by the US National Security Agency, is also a policy imperative for us. Naturally, our objective must be to acquire tangible national capacity, or comprehensive national power. This is the amalgam of economic, technological and industrial prowess, buttressed by the appropriate military sinews," he said.

    Just as the economic pendulum is shifting inexorably from the west to the east, so is the strategic focus. "This is exemplified by the increasing contestation in the seas to our east and the related 'pivot' or 'rebalancing' (of military forces) by the US in this area," he said.

    "This, to my mind, is a development fraught with uncertainty. We don't yet know whether these economic and strategic transitions will be peaceful, but that is the challenge this audience must grapple with institutionally," he added.

    Even as it ramps up strategic cooperation with Washington, New Delhi has already cold-shouldered the US move to anoint India as a "lynchpin" in its impending "pivot" towards the Asia-Pacific. It is keen to be seen as a neutral player in the geopolitical shadow-boxing between the US and China for supremacy in the region.

    India also does not want any third-party intervention in the contentious South China Sea, where China is locked in disputes with countries like the Philippines, Taiwan, Vietnam, Malaysia and Singapore over territorial claims. Defence minister A K Antony has held that it was "desirable" that the "parties concerned themselves should settle contentious matters in accordance with international laws".

    Source:Defence News - Govt may cut down on defence budget: PM
     
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  3. Decklander

    Decklander New Member

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    This same idiot PM used to say that we have a shared destiny with Pakistan and he has created a situation wherein his words are coming true. he is about to make us a begger again.
     
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  4. Shadow

    Shadow Regular Member

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    Is our Economic stability so bad that we need to reduce our defense budget despite increased threats from our neighbours??
     
  5. Decklander

    Decklander New Member

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    Well, its in an even worse state than what you think. We can be very shortly be declared a junk economy from being third largest economy of the world on the basis of PPP.
    Sibal talked of having taken the indian economy from USD 700b in 2004 to USD 1.87 trillion in 2011 but what he forgot to tell the world was that in 2011 1USD was 44 INR and if we look at today's exchange rate, we are just about USD 1.2 trillion. The overall pay of people in USD terms have fallen by 50% and so has the PPP due to high inflation. Khangrass has taken us back to the days of indian elephant growth rate of 5%. Compared to pay bracket in USD we now have more people who qualify to be poor as per international standards than what we had in 2004 due to devalution of rupee, increase in population and lack of jobs due to negative IIP. We are a much poor nation than what we were in 2004. The fact that govt has been forced to cut defence budget, MNREGA budget, education budget and even consider taking forward the CAD to next year budget shud tell you how badly our economy has been managed. I will be least surprised if we suddenly are declared bankrupt nation.
     
    Last edited: Nov 25, 2013
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  6. Abhijeet Dey

    Abhijeet Dey Regular Member

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    5 reasons why rupee recovery may not last
    Rupee has strengthened but is this sustainable.Or are we staring at a slip very soon
    Mumbai October 4, 2013

    LINK: business-standard.com/article/finance/5-reasons-why-rupee-recovery-may-not-last-113100400363_1.html

    One of the primary reasons for the recovery in the equity markets was stability and recovery in the currency market. Rupee has recovered nearly 11% since RBI governor Raghuram Rajan introduced measures to stem the slide. The currency also received help from Federal Reserve chief Ben Bernanke when he announced postponing of the tapering (its liquidity infusion) program.

    The rupee was within sniffing distance of 70 but has since recovered and currently trades at 61.50. The on-going shutdown in the US has also raised hopes that tapering would be postponed further, giving markets a leg-up.

    So are we out of the woods or is this just a pause before the slide continues.

    It is clear that the measures taken by the central banker and the events that have unfolded are all time-bound. What the rupee has got is only some breathing time.

    Here are five reasons why the rupee will continue on its ride downwards

    1) The main reason for the recovery of the rupee was introduction of a ‘subsidised’ FCNR (B) deposit scheme and a bank borrowing limit that was increased to 100 per cent. These were time bound instruments which expire in November 2013. A smart influx of dollars due to these measures is responsible for bringing some sanity in the currency market. But what will save the rupee post this expiry date.

    2. Tapering has been postponed by a few months. US cannot afford pumping the economy with more liquidity, especially since it is refusing to move up despite availability of easy money. Analysts believe that tapering might start in December 2013, which can lead to outflow of dollars from India. Foreign investors have withdrawn $11.5 billion of debt investment since Bernanke first hinted at tapering. There is still $26.5 billion worth of debt investment pending which can exit regularly when tapering actually starts. Even if they do not, on a best case scenario, little money will come in.

    3. Shutdown in the US cannot be for an unlimited period of time. If there is no consensus by October 17th, all hell will break lose. A compromise before that date would mean a firmer dollar as compared to other currencies, including the rupee. If no compromise is reached by that date, a defaulting US can set off a tsunami which will make the 2008 crisis a walk in the park.

    4. India’s high current account deficit makes it one of the most vulnerable emerging market countries. Though government has tried to manage it by controlling gold imports, it is only a temporary measure. Rising imports and falling exports will keep CAD high, especially when US and China are likely to slow down further and gold imports rise again as restrictions are eased.

    5. The year end will see election fever at its peak, with politicians scaring the markets with their speeches and ideas. This time around, rhetoric and political posturing are expected to touch a new high. Freebies and social schemes will be announced in abundance. These will be enough to scare any sane investor away from the markets.

    As the time for changing the calendar approaches and we wait for a new one from Kingfisher (will there be one next year?), India will have few things going right for it. Bernanke helped us to buy time and bring the economy back on the growth path but it looks like, we are again going to waste it. Time they say is money, we are running out of both and at a fast pace.
     
  7. nirranj

    nirranj Regular Member

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    I think He should have asked the Armed forces and the Def Industries to concentrate on completely indigenising the Indian Armed forces equipments.

    He should set a target date to achieve this and should ask Fin Min to not sanction anymore fund for imports after the cut off date.

    Every component should be given a cut off date based on Armies requirements and the DRDO's tie line for developing such a component indigineously.
     

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