Friday, November 17, 2017

Investment News and Commentary from Emerging Markets in Asia - China, India and ASEAN

About discusses business and investment news rising from the geopolitical relations of China and India, and the interactions these two countries have with the rest of emerging Asia.

India’s Rs. 17,200 Crore Question

Refuting all claims of a shrinking defence budget, the Indian Finance Minister announced a 5% increase in the defence budget for 2013-14. Coming at a time of increasing defence spending, and more recently, allegations of corruption during procurement, how can India put the new budget to effective use?

By Aakash Brahmachari

Mar. 5 – In an effort to dismiss any talk of compromising on defence, the Budget for 2013-2014 has increased India’s Defence Budget by 5% from last year to Rs. 2,03,672 crores ($42.5 billion). This includes Rs. 86, 741 crores ($16 billion) on arms acquisitions which is a hike of 9% over last year. Even as this will ensure India remains a leading arms importer, it will be a welcome relief if these purchases are not tainted by allegations of corruption.

Reports from the ‘Choppergate’ scandal indicate that middlemen were paid about Rs. 162 crores ($30million) to swing the decision in AgustaWestland’s favour.

This is worth about 4% of the Rs. 3,700 crores ($750 million) deal. A quick calculation reveals that if the rate of commission remains constant, middlemen stand to make Rs. 215 crores ($40 million) for every Rs. 5, 375 crores ($1 billion) worth of Indian arms acquisitions. In other words, though the new budget worth Rs. 86, 741 crores may be spread across different deals, it can still potentially net middlemen a commission of Rs. 3,440 crores ($640 million). In a nation of 1.2 billion citizens, that amounts to each citizen sharing a burden of about Rs. 20 ($0.5) for these commissions.

What can Rs. 3, 440 crores buy?

Continue reading this article on Gateway House

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