Defence gets ₹5.94 tn; ₹1.62 tn for modernization

The budget includes revenue expenditure ₹2.7 trillion and pension disbursement thereof ₹1.38 trillion.

This year’s defense budget is 2% of the country’s projected gross domestic product (GDP) for 2023-24.

It represents 13% of the total government budget.

The enhanced allocation comes at a time when India is locked in a border row with China and pursuing a range of modernization programs with a sharp focus on deploying locally produced weapons and systems.

This year’s capital outlay is about 6% higher than last year’s budget estimates and about 8% more than the revised estimates for 2022-23.

The capital allocation will power the purchase of fighter aircraft, helicopters, warships, missiles and some ground systems, including tanks and artillery guns.

“This expenditure will close critical gaps in combat capabilities and equip the Forces in terms of ammunition, sustainment of weapons and assets, military reserves etc,” Defense Minister Rajnath Singh wrote on Twitter.

The increase in disbursement will enable more local collaborations, critical technology development and transfer as well as skill development in the country, said Ashish Saraf, country director, India-Thales.

“This will further support the government’s objective of developing India as a global manufacturing hub to aid defense exports, and the vision of ‘Aatmanirbhar Bharat’ (self-reliant India),” he said.

However, some experts believe that the government could set aside more funds under the capital heading.

“We believe that the capex allocation will miss a proportionate reflection of the government’s encouragement of defense manufacturing,” said Gaurav Mehndiratta, head, aerospace and defence, KPMG India.

Revised estimates in the budget documents show that the armed forces were unable to spend money ₹2,369 crore from last year’s capital outlay ₹1.52 trillion.

Last year, the armed forces spent around ₹21,000 crore more than the previous year’s budget allocation, amid the ongoing border row with China that has seen India make emergency purchases and sharpen its focus on building infrastructure in advanced areas.

The ministry of defense spent ₹1.53 trillion on pensions last year (revised estimates) compared to ₹1.19 trillion (budget estimates).

The improved expenditure was largely due to revised pensions under the One Class, One Pension (OROP) scheme for veterans.

In December, the Union Cabinet, headed by Prime Minister Narendra Modi, approved a revision of the pension of ex-servicemen and family pensioners under the scheme, and the payment of arrears amounting to over 2.5 million pensioners protected. ₹23,638 crore.

The Defense Minister said the government was committed to strengthening infrastructure in the border areas, especially the northern borders with China.

“The capital budget of the Border Roads Organization (BRO) has increased by 43%. ₹5,000 crore in FY 2023-24 in comparison ₹3,500 crore in FY 2022-23,” he said.

India allocated ₹5.25 trillion for military expenditure in last year’s budget, ie. ₹4.78 trillion in 2021-22, and ₹4.71 trillion the previous year.

The payment received by Agniveer from the Agniveer corpus fund is intended to be tax-free, according to the budget documents.

“It is proposed to allow a deduction in the computation of total income to the Agniveer on the contribution made by him or the central government to his Seva Nidhi account.”

Agnipath’s model of short-term induction of soldiers into the three services is a major departure from the army’s recruitment system which was phased out when the government announced the new scheme in 2022.

It seeks to recruit soldiers for the next four years, with a provision to keep 25% of them in regular service.

Those who are released will receive after four years ₹11.71 lakh as Seva Nidhi retirement package, incl ₹5.02 lakh they gave during their service.

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Updated: 02 February 2023, 02:22 AM IST