Defence sits on a new high in budget pie, ‘atmanirbharta’ an abiding theme

Because of the nature of its mandate, it is business as usual when the Ministry of Defence gets the highest share of the Union Budgetary pie and scales a new high at 12.90% of the country’s total budget for 2024-25.

On Tuesday, Finance Minister Nirmala Sitharaman set aside the highest-ever sectoral allocation for defence at Rs 6,21,940 crore—higher by about a lakh crore or 4.79% more than the 2022-23 allocation.

Of the total defence allocation, 27.66% (Rs 1,72,000 lakh crore) goes to capital expenditure, 14.82% for revenue expenditure on sustenance and operational preparedness, 30.66% for Pay and Allowances; 22.70% for Defence Pensions, and 4.17% for the civil organisations under the ministry.

Capital expenditure is a critical element in the country’s mega modernisation effort that includes big ticket acquisitions in current and subsequent years. It means more buys of fighter aircraft, ships, submarines, unmanned aerial vehicles, drones, specialist vehicles, and lethal weapons, including state-of-the-art niche technology systems and platforms.

While Rs 6,500 crore has been allocated for border roads development, Rs 7,651 has been set aside for coastal security.

The amount allocated for border infrastructure is 30% higher than the allocation for FY 2023-24, and 160% higher than the allocation for FY 21-22.

This will go into ongoing projects like the Nyoma Airfield in Ladakh at an altitude of 13,700 feet, bridge connectivity to the southernmost tip of India in the Andaman and Nicobar Islands, the strategically important Shinku La tunnel in Himachal Pradesh and the Nechiphu tunnel in Arunachal Pradesh, among other key projects.

These numbers are the same as the allocation made to the defence ministry during the interim budget presented on February 1, 2024, the only difference being an additional allocation of Rs 403 crore on innovation in defence through the Acing Development of Innovative Technologies with iDEX (ADITI) scheme. This is an increase of Rs 103 crore from Rs 115 crore in FY 2023-24.

A flagship ministry scheme to handhold, aid startups and promote innovations, iDEX engages them to develop deep defence technology solutions and supply the Indian military with innovative and indigenous technological solutions. A grant of up to 50% of the Product Development Budget with an enhanced limit (Max) of Rs 25 crore per applicant will be awarded as per extant iDEX guidelines.

Of the modernisation budget, 75% or Rs 1,05,518.43 crore is earmarked for procurement through domestic industries during this FY underlining the ongoing ‘atmanirbharta’ effort which has implications of a multiplier effect on GDP, employment generation and capital formation.

Of significance is the continued higher allocation for operational readiness—Rs 92,088 crore during the current FY, 48% higher than last year’s budgetary allocation.

This money goes into keeping the Armed Forces battle-ready at all times and includes the provision of “maintenance facilities and support system to all platforms including aircraft and ships, facilitate procurement of ammunition, mobility of resources & personnel as demanded by the security situation, and strengthen the deployment in forward areas for any unforeseen situation”.

DRDO will get a little more—Rs 23,855 crore in FY 2024-25 from Rs 23,263.89 crore in FY 2023-24. Of this Rs 13,208 crore is to be set aside for capital expenditure which will help the DRDO to develop new technology and hand-hold private parties.

Defence Minister Rajnath Singh expressed his happiness on X: “As far as the allocation to Ministry of Defence is concerned, I thank the Finance Minister for giving the highest allocation…”

“The capital outlay of Rs 1,72,000 Crore will further strengthen the capabilities of Armed Forces. Earmarking of Rs, 1,05,518.43 Crore for domestic capital procurement will provide further impetus to Atmanibharta,” he added.