New Delhi, June 9: India’s dramatic hike in defence allocations has made South Asia the region where military expenditure increased most in 2004, according to data compiled by a respected watchdog of arms transfers and conflicts.

New Delhi today signalled it was buying more. Defence minister Pranab Mukherjee released a manual that revises the policy to procure big-ticket items and said he was going to ask for supplementary grants to cover defence expenditure.

The cornerstone of the new policy ? drafted in the wake of allegations of corruption in defence deals ? is that it will require defence contractors entering into negotiations with India to sign an “integrity pact”, an oath that they will not employ unfair trade practices.

“South Asia, where India strongly increased its defence budget, was the region where military expenditure increased most in 2004,” the Stockholm International Peace Research Institute (Sipri) has said in its just released yearbook for 2005.

Finance minister P. Chidambaram granted a hike of more than Rs 11,000 crore, taking defence allocations in 2004-2005 to Rs 77,000 crore. For the current year, the allocation is Rs 6,000 crore more. In the first quarter of the year itself, the defence minister said, he was toying with the idea of asking for a supplementary grant.

The huge military expenditure through last year and this year is accompanied at the same time with talks for peace with Pakistan and China, from whom India has threat perceptions. The confidence that such peace talks should inspire is not reflected in the military expenditure that New Delhi is incurring.

Sipri is pointing out that India’s military expenditure was contributing to an arms race in South Asia.

Major conventional weapons under delivery to Pakistan include, for instance, 150 JF-17 fighter aircraft from China, Agosta 90B submarines from France, helicopters worth $82 million from Russia and air surveillance radars worth $255 million from the US.

Multi-billion-dollar deals that India has contracted or is negotiating are 66 Advanced Jet Trainers from the UK, six Scorpene submarines from a Franco-Spanish concern, 126 multi-role combat aircraft, and an aircraft carrier from Russia.

Mukherjee said the government was still deciding if the “integrity pact” that has been prescribed in the new policy will apply to all these deals.

Even if the arms race in South Asia makes it the most militarised region in the world, in value terms military expenditure is still a fraction of the US’s. The Sipri report says world military expenditure exceeded $1 trillion in 2004 and the US alone accounted for 47 per cent of this spending. The $1-trillion-plus figure is slightly lower than the 1987-1988 cold war peak.

China’s spending had slowed in 2004 and was lower in real terms than its average spending in 1995-2003.

Central America and western Europe were the only regions where regional military expenditure reduced in 2004. Combined sales of the top 100 manufacturers in 2003 were 25 per cent higher than in 2002.