The first instalment of the Rs 16,000 crore (Rs 160 billion) Admiral Gorshkov aircraft carrier deal that India signed with Russia earlier this week, and the British-made Advanced Jet Trainer (the Hawk) is likely to feature in the vote-on-account to be tabled on February 3 in the Lok Sabha.
Top sources in the government told Business Standard that the vote-on-account will be taken for expenditure for four months -- from February to May -- and will be for specific allotments made for defence deals.
A detailed defence budget will follow in June/July when the full Budget is presented. The government will seek sanction to spend around Rs 700 crore (Rs 7 billion) on the Gorshkov and around Rs 300 crore (Rs 3 billion) as the first instalment for the AJT.
A feature of the vote-on-account is likely to be the announcement of a non-lapseable fund for defence capital expenditure, a suggestion made by Jaswant Singh when he was defence minister. This will address the problem of long gestation periods of defence procurements.
Although the cost of retrofitting the Gorshkov is around $800 million, the cost is expected to go up to $1.5 billion [Rs 7,000 crore (Rs 70 billion)] after the aircraft carrier is complete.
Costs will go up because negotiations are on with the Russians to also lease an Akula class nuclear-powered submarine [Rs 6,000 crore (Rs 60 billion)] by the end of the year, a project neither Russia nor India wants to confirm, and four M-122 bombers that will form a complement of weapons that Russia is pushing as a package deal along with the sale of the Gorshkov.
These items might more than double the cost of the acquisition of the Gorshkov. A crew of naval officers is ready to go to Russia for training in anticipation of the finalisation of the deal.
The first instalment is usually 10 per cent of the amount and the government is catering for around Rs 700 crore on account of the first instalment of the Gorshkov.
Although some analysts including the former Air Force chief, Air Marshal HC Sareen, have argued against the Navy buying an aircraft carrier on the grounds that it is not needed and that it is a used hull, Gorshkov's acquisition by 2008 will buy both time and capability for India.
India's indigenous nuclear-powered submarine project, the Advanced Technology Vessel project is expected to be completed in another 10 years.
The leasing of the nuclear submarine will represent sea-based deterrence till the Navy gets its own nuclear-powered submarine.
Also, India can use the nuclear-powered submarine as a platform for the nuclear-capable version of the Brahmos, the 300 km range missile that is under Indian and Russian joint development.
Its range will ensure it is kept below the Missile Technology Control Regime threshold. And with the aircraft carrier Viraat being decommissioned in 2008, the Gorshkov will be India's mainstay to ensure defence of the seas.