In the current geopolitical scenario and with the twin objective
of promoting self reliance and exports, the Defence Budget has touched Rs
6,21,540.85 crore in the Financial Year 2024-25. This comes out to be 13.04% of
total Union Budget, which was presented by Finance Minister Smt Nirmala
Sitharaman in Parliament on 1 February 2024.
The Ministry of Defence (MoD) continues to receive the highest
allocation among the Ministries. The budgetary allocation to Defence for FY
24-25 is higher by approx. one lakh crore (18.35%) over the allocation for the FY
2022-23 and 4.72% more than allocation of FY 23-24. Of this, a major share of
27.67% goes to capital, 14.82% for revenue expenditure on sustenance and
operational preparedness, 30.68% for Pay and allowances, 22.72% for defence
pensions and 4.11% for civil organisations under MoD.
Budgetary allocation for capital expenditure in Defence for FY 24-25
is Rs 1.72 lakh crore which is 20.33% higher than the actual expenditure of FY
22-23 and 9.40 % more than the Revised Allocation of FY 23-24. The
allocation is in line with the Long Term Integrated Perspective Plan (LTIPP) of
the three Services aimed to fill the critical capability gaps through
modernisation of the Armed Forces by materialising some big ticket
acquisitions in FY 2024-25. The enhanced budgetary allocation will facilitate
in equipping the Armed Forces with state of the art, niche technology
lethal weapons, fighter aircraft, ships, platforms, unmanned aerial vehicles,
drones, specialist vehicles etc.
Planned modernisation of existing Su-30MKI fleet along with
additional procurement of aircraft, acquisition of advanced engines for
existing MiG-29, acquisition of transport aircraft C-295 and missile systems
will be funded out of the budget being allocated. Apart from this, to take the
initiative of ‘Make in India’ further the LCA MK–I IOC/FOC configuration will
be additionally funded to ensure state of the art technology in domestic
production. The Indian Navy projects such as acquisition of deck based fighter
aircraft, submarines, next generation survey vessels etc will all materialise
through this allocation. The sizeable allocation under capital is centered
around promoting ‘Aatmanirbharta’ in Defence. Large portion of the allocation
will be utilised for procurement through domestic sources to provide
domestically manufacutured next generation weapon system to the country which
will have a multiplier effect on the GDP, create employment, ensure capital
formation and provide a stimulus to the domestic economy.
As per the Economic Survey of India report 2023, in the ship building
sector, the investment multiplier is around 1.82, which means that an infusion
of approx. Rs 1.5 lakh crore in naval ship-building projects would accrue a
circulation of Rs 2.73 lakh crore in the ship building sector due to the
multiplier effect.
This year onwards, the Government of India has taken a conscious
call to foster jointness among the services by consolidating the demand of
the three Services into similar items of expenditure such as Land,
Aircraft and Aeroengines, Heavy and Medium Vehicles etc.
Allocation to the Armed Forces for revenue expenditure (other than
Salary) meant for sustenance and operational commitment for FY 24-25 continues
to be high at Rs 92,088 crore, which is 48% higher than the budgetary
allocation of FY 2022-23. During the mid-year review, the allocation on
this head was increased by 82% over the budgetary allocation of FY 22-23
crossing the figure of Rs one lakh crore for the first time. This is aimed at
providing best maintenance facilities and support system to all platforms,
including aircraft and ships.
Total Budgetary allocation on account of Defence pensions is Rs.
1,41,205 crore which is 2.17% higher than the allocation made during 2023-24.
It will be incurred on monthly pension to approx 32 lakh pensioners through
SPARSH and through other pension disbursing authorities.
In the light of the continued threat perception faced at the
Indo-China border, there continues a jump in the Capital Budget allocation to
the Border Roads Organisation. The allocation for BE 2024-25 is Rs 6,500 crore,
which is 30% higher than the allocation for FY 23-24 and 160% higher over
the allocation of FY 2021-22.
Allocation to the Indian Coast Guard (ICG) for this FY 2024-25 is
Rs 7.651.80 crore which is 6.31% higher over the allocation of FY 2023-24. Of
this, Rs 3,500 crore is to be incurred only on capital expenditure, adding
teeth to the arsenal of the ICG to address the emerging challenges posed in
water and provide humanitarian assistance to other nations.
The budgetary allocation to Defence Research and Development
Organisation (DRDO) has been increased to Rs 23,855 crore in FY 2024-25 from Rs
23,263.89 crore in FY 2023-24. Of this allocation, a major share of Rs 13,208
crore is allocated for capital expenditure.