NEW DELHI March 1, Reuter: Prime Minister Rajiv Gandhi has announced a huge increase in India’s defense spending, while ordering other expenditure held down, in a budget tht has drawn widespread criticism.

Gandhi told Parliament last night he would boost defense spending by 43 per cent to 125 billion rupees (10 billion dollars) for the year beginning April 1, equal to over 17 per cent of total budget expenditure.

He was speaking just four weeks after 200,000 Indian and Pakistani troops confronted each other across their common border in the most serious military crisis between the two countries since their last war in 1971.

Gandhi said the burden would be heavy but India, one of the world’s poorest countries, could not compromise on defense.

“In the recent period we have been compelled to increase defense expenditure. We shall spare no effort nor shrink from any sacrifice where our national security is concerned,” he said.

Gandhi presented the budget himself, having taken over the Finance Portfolio five weeks ago after moving former Finance Minister, V.P. Singh, to defense at the height of the military crisis with Pakistan.

Although Gandhi announced small increases in poverty alleviation and education outlays, he also ordered current expenditure held down in an attempt to narrow last year’s 83 billion rupee (six billion dollars) record budget deficit.

The proposed deficit for 198788 is 57 billion rupees (four billion dollars).

“The deficit is high and I do not like it. I have decided that the deficit in the budget estimates for 198788 shall not be exceeded.” He did not say how he would achieve this.

Opposition politicians, businessmen, and the press criticized the budget’s proposed deficit. They said it failed to provide incentives for economic growth and merely.

tinkered with tax reform.

Few politicians, however, were prepared to criticize defense expenditure in a Hindu majority nation where playing on the fear of aggression from a Moslem neighbour has long proved a vote winner.

The Indian Express, the country’s biggest selling paper, merely noted, “The defense cow has never been holier”.

Gandhi, whose Congress (1) party faces elections in several states this month, announced no major tax increase or development spending cuts.

The Sunday Mail branded the budget “shamelessly political”.

“The budget is bad for growth, bad for prices, bad for the stock market and neutral in respect of everything else”, it said in a FrontPage commentary.

Businessmen polled by Reuters said the budget had done little for them. They said Gandhi adopted the socialist rhetoric of his grandfather Jawarhalal Nehru to avoid the pro rich image of his government’s two previous budgets.

Article extracted from this publication >>  March 6, 1987