In India's 'Make Or Break' Budget, Defense May Take a Back Seat

India's disruptive cash ban may prevent Finance Minister Arun Jaitley from using this week's budget to quicken the pace of the country's much-needed military modernization.

With economists slashing India's 2016 growth estimates because of Prime Minister Narendra Modi's move to eradicate 86 percent of India's currency in circulation, analysts doubt India's armed forces will get an increase beyond the bare minimum. Even as India's soldiers leak videos of grim conditions on the front line of the country's decades-long conflict with Pakistan, extra budget stimulus for defense is not likely.

"It is unlikely to happen because the economy is not doing very well, there is an overall resource crunch," said Laxman Behera, who has advised the government on military expenditure and is a fellow at the government-funded Institute for Defence Studies and Analyses in New Delhi. "If growth is down, and there is spillover effect, then it is definitely not a good sign for defense."

The defense ministry needs an increase of roughly 10 percent to deal with inflation and the vast sums required to modernize India's aging military hardware -- from Soviet era aircraft to outdated guns and body armor. But many expect the government instead to focus the budget on soothing the impact of demonetization.