A new defence plan is being formulated to cover 1969-74 in view of the rephasing of the Fourth Five-Year Plan over this period. This takes into account “the continuing hostility of Pakistan and China” towards India, “their strategic and military capabilities and the possibility of their acting in concert” against India. This has been revealed in the annual report of the Ministry of Defence for 1968-69. The report also outlines a defence expenditure of Rs. 1,110 crores for 1969-70, which works out to be 3.46 per cent of the gross national product. This is against the defence expenditure of Rs. 1,051.38 crores for 1968-69 which was 3.4 per cent of the gross national product. A new factor which has arisen during the year, the Ministry said, is the possibility of supplies of military equipment to Pakistan from the Soviet Union. Such supplies in addition to those coming from other countries at concessional rates including China are bound “to move Pakistan towards a posture of even increased intransigence and would certainly make normalisation of relations more difficult.”.