Some defence ministry projects are likely to be affected as government rejected its demand for an extra allocation of Rs.7,870 crore to pay for fuel that has gone up since the last budget, as also increased salaries, saying this sould be met from existing resources, a source in the ministry said.
"The cost of fuel has gone up considerably and salaries have also increased. The ministry needed some extra fund for this," the source said.
However, finance ministry turned down the demand and asked the defence ministry to utilise money from its capital expenditure fund.
"The ministry had spent 82% of the capital expenditure by the end of December," the source said.
"This amount will now have to be taken from the remaining 18 percent of the capital expenditure fund. It will affect some of the projects," the source added.
The defence ministry was allocated Rs.2.03 trillion ($37.45 billion) for 2013-14. Capital expenditure to acquire or upgrade fixed assets - including force augmentation and procurement of new weapons and systems - was pegged at Rs.867.41 billion.
The source, however, added that the denial of funds will not affect the "operational efficiency of the armed forces".