In the current world situation, aiming for self-reliance and boosting exports, the Defence Budget for the Fiscal Year 2024-25 has reached Rs 6,21,540.85 crore, constituting 13.04 percent of the total Union Budget. The Ministry of Defence (MoD) remains the top recipient of budgetary allocations.
For FY 24-25, the Defence budget is increased by approximately one lakh crore (18.35 percent) compared to FY 2022-23 and is 4.72 percent more than the allocation for FY 23-24. Breakdown includes 27.67 percent for capital, 14.82 percent for operational expenses, 30.68 percent for Pay and allowances, 22.72 percent for defence pensions, and 4.11 percent for civil organisations under MoD.
How will the enhanced budget help the Armed Forces?
The allocation aligns with the Long-Term Integrated Perspective Plan (LTIPP) for the Armed Forces, focusing on filling crucial capability gaps through modernization in FY 2024-25.
The increased budget supports equipping the Armed Forces with cutting-edge technology, including lethal weapons, Fighter Aircraft, Ships, Platforms, Unmanned Aerial Vehicles, Drones, and Specialist Vehicles.
Planned upgrades for the Su-30 fleet, additional aircraft procurement, advanced engines for MiG-29, C-295 transport aircraft, and missile systems will be funded from the allocated budget.
In line with ‘Make in India,’ funds will further support LCA MK–I IOC/FOC configuration, ensuring advanced technology in domestic production.
Indian Navy projects like Deck-based fighter aircraft, Submarines, and Next-generation survey vessels will materialize through this allocation.
A significant capital allocation promotes ‘Aatmanirbharta’ in Defence, emphasizing procurement from domestic sources. This approach aims to provide the country with domestically manufactured next-generation weapon systems, fostering GDP growth, employment, capital formation, and stimulating the domestic economy.
Details about the Allocation
The government plans to spend Rs 1.72 lakh crore on defence projects in the fiscal year 2024-25, showing a 20.33percent increase from the previous year’s actual spending and a 9.40percent rise from the revised allocation of the year before.
According to the Economic Survey of India in 2023, investing around Rs 1.5 lakh crore in naval ship-building projects could lead to a total circulation of Rs 2.73 lakh crore in the ship-building sector, thanks to the investment multiplier of 1.82.
Starting this year, the government aims to enhance collaboration among the services by consolidating their expenditure categories. This includes common items like Land, Aircraft, Aero Engines, Heavy, and Medium Vehicles.
This approach aims to improve financial flexibility, allowing the MoD to redistribute funds based on the priorities of the different services. It’s expected to streamline decision-making and enhance the effective use of the capital budget.
Operational Readiness
The money given to the Armed Forces for day-to-day needs and operations in the fiscal year 2024-25 is now Rs 92,088 crore, 48% more than the budget in 2022-23. In the middle of the year, the allocation for this purpose increased by 82%, crossing Rs one lakh crore for the first time. This is to ensure good maintenance, support systems, and resources for planes, ships, and other needs of the Armed Forces. The increased funding since 2023-24 has addressed the concerns of the forces and improved their ability to be ready for any situation.
Defence Pension Budget increased to Rs 1.41 lakh crore
Total Budgetary allocation on account of Defence pensions is Rs 1,41,205 crore which is 2.17percent higher than the allocation made during 2023-24. It will be incurred on monthly pension to approx. 32 lakh pensioners through SPARSH and through other pension disbursing authorities.
Allocation to Ex-Servicemen Welfare Scheme (ECHS)
In line with the Government’s resolve to provide best health care facilities to Ex-Servicemen, War veterans, Veer naris and their family members the total allocation to Ex-Servicemen Welfare Scheme for FY 2024-25 is 28 percent higher than the allocation for FY 23-24 (From Rs 5,431.56 crore to Rs 6,968 crore). This is in addition to the allocation at revised estimate stage during the current year where the budgetary allocation to ECHS was enhanced by 70percent over BE of 2023-24 and was made to Rs 9,221.50 crore. This significantly higher allocation is to take care of Medical Treatment Related Expenditure (MTRE) incurred during the COVID period and to compensate for the increase in ECHS rates bringing it at par with the CGHS rates.
Strengthening Border Infrastructure for strategic requirements
In response to the escalating threat perception along the Indo-China border, there’s a notable surge in the Capital Budget allocation for the Border Roads Organisation in BE 2024-25. The allocated Rs 6,500 crore signifies a 30% increase from FY 23-24 and an impressive 160% rise from FY 2021-22.
This underscores the government’s unwavering commitment to fortifying border infrastructure, with the funds poised not only for strategic development but also to catalyze socio-economic progress and tourism in the region. Noteworthy projects set to receive funding encompass the Nyoma Air field in Ladakh, a bridge to the southernmost Panchayat in Andaman and Nicobar, the strategically crucial Shinku La tunnel in Himachal Pradesh, and the Nechiphu tunnel in Arunachal Pradesh.
For Coast Guard
Simultaneously, the Indian Coast Guard experiences a 6.31 percent augmentation in its allocation for FY 2024-25, reaching a total of Rs 7,651.80 crore. Of this, a substantial Rs 3,500 crore is designated for capital expenditure, bolstering the Indian Coast Guard’s capabilities to effectively address waterborne challenges and extend humanitarian assistance. This financial injection will facilitate the acquisition of high-speed patrolling vehicles, advanced electronic surveillance systems, and cutting-edge weaponry.
Deep-Tech — DRDO
The imperative of self-reliance in defence technology is emphasized through a noteworthy increase in the budgetary allocation to the Defence Research and Development Organisation (DRDO). For FY 2024-25, the budget climbs to Rs 23,855 crore from Rs 23,263.89 crore in FY 2023-24. A significant chunk of this allocation, Rs 13,208 crore, is earmarked for capital expenditure, fortifying DRDO’s ability to pioneer new technologies, with a particular emphasis on fundamental research.
Further, the allocation to the Technology Development Fund (TDF) scheme stands at Rs 60 crore, specifically tailored to support startups, MSMEs, and academia engaged in innovative defence technology. The announcement of a Rs one lakh crore corpus for Deep Tech, offering long-term loans to tech-savvy individuals/companies, and tax advantages for startups is expected to provide a substantial boost to innovation in the defence sector.
Expressing commendation through a post on X, defence minister Rajnath Singh applauded Finance Minister Nirmala Sitharaman for presenting a forward-looking ‘Interim Budget’.
This budget, as outlined by Singh, aligns with the vision of a confident, strong, and self-reliant ‘Viksit Bharat’ envisioned by Prime Minister Narendra Modi. The budget, in Singh’s perspective, signals a significant push for infrastructure, construction, manufacturing, housing, and technology development.
During the challenging period of the COVID-19 pandemic, Singh notes India’s emergence as a beacon of hope, and he sees the current budget as perfectly aligned with PM’s ‘Panchamrit Goals’, setting the stage for the next five years of unprecedented growth. And stated that this will significantly contribute to achieving the goal of making India a five-trillion-dollar economy by 2027.
