Finance Minister Nirmala Sitharaman unveiled a substantial defence allocation of nearly ₹6.22 lakh crore for the financial year 2024-25 in an attempt to bolster national security and advance self-reliance in defence technology. This allocation highlights the government’s commitment to enhancing military capabilities and supporting domestic defense manufacturing under the ‘Atmanirbhar Bharat’ initiative.
Allocation Overview
The defence budget for 2024-25 marks a 4.79% increase from the ₹5.93 lakh crore allocated in the budget estimates for the financial year 2023-24, though it is marginally lower than the revised estimates of ₹6.23 lakh crore from the previous year. The current allocation stands at ₹6,21,940.85 crore, including ₹2.82 lakh crore for revenue expenditure, ₹1.72 lakh crore for capital expenditure, and ₹1.41 lakh crore for pensions. Notably, the capital outlay includes ₹1.05 lakh crore designated for domestic procurement, while the revenue outlay covers ₹92,088 crore for operational readiness.
The defence budget now constitutes 12.9% of the total government budget and 1.9% of the projected GDP for 2024-25.
Domestic Procurement and Modernisation
A significant focus of this year’s defence allocation is on domestic procurement, with 75% of the modernisation budget earmarked for purchasing weapons, systems, and equipment from Indian suppliers. “This will have a multiplier effect on the GDP, employment generation and capital formation, thus providing a stimulus to the economy,” the defence ministry stated. The goal is to foster self-reliance in defense technology and manufacturing while equipping the armed forces with cutting-edge capabilities.
The budget also includes an additional ₹400 crore for innovation through the ADITI scheme (Acing Development of Innovative Technologies with iDEX), aimed at encouraging advancements in defense technology.
Capital Expenditure and Key Projects
The capital outlay for modernisation is set at ₹1.72 lakh crore, reflecting a 20.33% increase from the actual expenditure of ₹1.43 lakh crore in FY 2022-23 and a 9.40% rise from the revised allocation of ₹1.57 lakh crore in FY 2023-24. This increase is intended to address critical capability gaps through significant acquisitions in the current and subsequent fiscal years.
The enhanced allocation will support the acquisition of state-of-the-art military hardware, including fighter jets, helicopters, warships, tanks, artillery, rockets, missiles, unmanned systems, and other combat technologies. This is crucial as India continues to face ongoing military tensions with China along the Line of Actual Control (LAC), which has now entered its fifth year with no immediate resolution in sight.
Border Infrastructure and Special Schemes
The Border Roads Organisation, a key player in India’s border infrastructure development, has been allocated ₹6,500 crore. This represents a 30% increase from the previous fiscal year and a 160% rise from FY 2021-22.
Additionally, the revenue expenditure includes nearly ₹6,000 crore for the Agnipath scheme, which marks an increase from the ₹4,266 crore and ₹3,518 crore allocated in the budget and revised estimates for 2023-24, respectively.
Challenges and Execution
Despite the increased budget, the armed forces faced challenges in utilizing last year’s capital outlay, with an unspent amount of ₹5,372 crore from the ₹1.62 lakh crore allocation. This follows significant emergency purchases and infrastructure development due to heightened border tensions with China.
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