At Rs 6.2 lakh crore, defence budget gets a modest hike

In a conservative uptick, the Union government hiked the defence budget to Rs. 6.21 lakh crore for the fiscal year 2024-25, A hike of Rs. 27,000 crore over 2023-24, marking an increase from the previous year's allocation of Rs. 5.94 lakh crore. During Finance Minister Nirmala Sitharaman's interim budget announcement, Rs 1.72 lakh crore was earmarked for military capital expenditure.

This allocation predominantly covers procuring new weapons, aircraft, warships, and other military hardware. At the same time, an ambitious initiative for "deep-tech" technologies within the military sector was also unveiled. For 2023-24, the budgetary allocation for capital outlay was Rs. 1.62 lakh crore.

The overall revenue expenditure is estimated at Rs. 4,39,300 crore, encompassing Rs. 1,41,205 crore for defence pensions, Rs. 2,82,772 crore for defence services and Rs. 15,322 crore for the Ministry of Defence (Civil). Within the capital outlay for defence services, Rs. 40,777 crore is designated for aircraft and aero engines, while Rs. 62,343 crore is earmarked for "other equipment."

In the budget for 2023-24, the capital outlay for the Indian Air Force (IAF) was the highest at Rs. 57,137.09 crore, including Rs. 15,721 crore for procurement of aircraft and aero engines and Rs. 36,223.13 crore for other equipment. The allocated budget will finance the planned modernisation of the existing Su-30 fleet, additional aircraft procurement, the acquisition of advanced engines for existing MiG-29, transport aircraft C-295 and missile systems. Furthermore, additional funding will support the LCA MK–I IOC/FOC configuration to advance the'Make in India' initiative, ensuring cutting-edge technology in domestic production.

An outlay of Rs. 23,800 crore has been made for the naval fleet and Rs. 6,830 crore for naval dockyard projects. This budget will also materialise various Indian Navy projects, including acquiring deck-based fighter aircraft, submarines, and next-generation survey vessels.

The substantial capital allocation is strategically focused on promoting 'Aatmanirbharta' in Defence. A significant portion of this allocation will be directed towards procurement from domestic sources, facilitating the production of next-generation weapon systems within the country. This approach is expected to have a multiplier effect on the GDP, generate employment, encourage capital formation, and stimulate the domestic economy.

The revenue expenditure for the Army has been pegged at Rs. 1,92,680 crore for 2024-25, while the Navy and the IAF have been allocated Rs. 32,778 crore and Rs. 46,223 crore, respectively.

There is a marginal increase in the budgetary allocation for DRDO, which has witnessed an increase to Rs. 23,855 crore in FY 2024-25 from Rs 23,263.89 crore in FY 2023-24. A substantial portion of this allocation, amounting to Rs. 13,208 crore, is dedicated to capital expenditure for the development of new technologies, with a specific emphasis on fundamental research and fostering collaboration with private entities through the development-cum-production partner approach.

Furthermore, the Technology Development Fund (TDF) scheme allocation stands at Rs, 60 crore. This scheme is designed to support new start-ups, MSMEs, and academia, encouraging bright young minds interested in innovation and the development of niche technology in the defence domain in partnership with the DRDO.

The announcement of the Rs. one lakh crore corpus for Deep Tech, earmarked for long-term loans to tech-savvy youth/companies and tax advantages for start-ups, is poised to provide additional momentum to innovation within the defence sector, the Ministry hopes.

On the increase of capital expenditure outlay, Defence Minister Rajnath Singh described it as a massive push, which will provide a big boost to making India a five trillion dollar economy by 2027.

(The author is a journalist, who writes on defence, strategic affairs and technology)