With a focus on modernization and infrastructural development and for the armed forces to be battle ready the non-salary revenue outlay has been enhanced significantly. It has gone up from Rs 62,431 crore in Budget Estimates (BE) 2022-23 to Rs 90,000 crore in BE 2023-24. Thus representing almost a 44 percent jump.
According to an official statement issued by the Ministry of Defence issued on Feb 1, 2023, this allocation is expected to not only close critical gaps in the combat capabilities, but will help to equip the Forces in terms of sustenance of weapons and assets, ammunition, military reserves etc.
Out of the total outlay of Rs 45,03,097 crore of the Union Budget the Ministry of Defence has been allocated a total Budget of Rs 5,93,537.64 crore and this allocation includes an amount of Rs 1,38,205 crore for Defence Pensions. This is almost 13.18 percent of the total budget.
As has been reported earlier in Financial Express Online the total Defence Budget represents an increase of Rs 68,371.49 crore (around 13 percent) over the FY2023 budget.
Terming the Union Budget 2023-24 as growth-oriented, defence Minister Rajnath Singh has said that it will help in achieving the Government’s goal of making India a $5 trillion economy within few years
The hike in the budget will help in hiring and procuring niche capabilities which will mitigate capability gaps wherever required. Also in strengthening forward defences, stocking of military reserves, amongst others. And enable emergency procurement of critical ammunition and spares and boost fleet serviceability; ships, aircraft and their logistics and other weapons systems.
During the Mid-term review the government had enhanced the operational allotments of the current financial year by around Rs 26,000 crore, which is around 42 percent of the present allocation. Because of an increase in the revised estimates in 2022-23 it ensured liquidation of the entire carry over liabilities during the current year. This means that there is no impact in the next FY’s operational outlay of the Armed Forces.
The hike in the budget is also expected to cater to the Training Aids and Simulators for Agniveers.
Focus on Modernisation & Infrastructure Development
In the Capital Allocations related to the modernization and infrastructure development there is an increase to Rs 1,62,600 crore representing a rise of Rs 10,230 crore (6.7%) over FY 2022-23. And since 2019-20 the increase in the Capital Budget has been Rs 59,200 crore (around 57 percent).
Focus on infrastructure strengthening in the Border Areas, especially Northern borders
Accordingly, the Capital Budget of Border Roads Organisation (BRO) has gone up by 43 percent to Rs 5,000 crore compared to Rs 3,500 crore of previous fiscal. This increase, according to the ministry, will help in enhancing border connectivity and strengthening the infrastructure and create strategic assets like Sela Tunnel, Nechipu Tunnel & Sela-Chhabrela Tunnel.
R&D and Atmanirbhar Bharat
Once again the R&D allocation for Defence Research and Development Organisation has been hiked. This time it is by 9 percent with a total allocation of Rs 23,264 crore in BE 2023-24.
iDEX and DTIS have been allocated Rs 116 crore and Rs 45 crore respectively as this will help encourage technology development, further foster innovation, and further strengthen the Defence Industrial ecosystem in the country to further give a boost to the defence start-ups and iDEX scheme, National Data Governance Policy has been announced and this will unleash innovation and research by start-ups and academia.
To give a fillip to the MSMEs in the defence sector Revamped Credit Guarantee scheme has been announced. This scheme will come into effect starting April 1, 2023 through an infusion of Rs. 9,000 Crore in the corpus. And this is expected to enable additional collateral-free guaranteed credit of Rs 2 lakh crore. Also the cost of the credit has been reduced by about 1 percent.
There is a notable jump of 15.5 percent in the Defence Pensions in FY 2023-24. This according to the MoD statement includes an amount of Rs 28,138 crore to meet the requirement on account of revision of Armed Forces Pensioners/ Family Pensioners under One Rank One Pension (OROP).
There is a notable increase of 52 percent in the allotment for Ex-Servicemen Contributory Health Scheme (ECHS) — Rs 5431.56 crore in FY 2023-24. This enhancement is expected to ensure ‘Cashless Health Services’ and also provide improved ‘Service Delivery’ to veterans and their dependents across the country.
They have been provided Exempt-Exempt-Exempt (EEE) status to the Agniveer Fund.