In a significant measure to bring jointness in the procurements of the armed forces, the Government has decided to consolidate the demand of the three services in the capital head of the defence budget based on similar items of expenditure such as land, aircraft and aeroengines, heavy and medium vehicles among others. In the interim budget presented by Finance Minister Nirmala Sitharaman, there was no significant change in the allocation for defence with the total allocation for the Ministry of Defence (MoD) stands at ₹6.2 lakh crore for 2024-25.
“This will bring flexibility in financial management by enabling the MoD to reappropriate the fund among the three services keeping in view the inter services priority. This mechanism will also expedite decision making and ensure better utilisation of the capital budget,” the MoD said in a statement.
This is a significant measure towards bringing in jointness in procurements among the three services and addresses the shortfall often faced between committed liabilities, milestone payments to be made for past deals, versus the allocation for each service which was faced by Navy and Air Force in the past. For major capital procurements, the authority to prioritise is the Chief of Defence Staff and once cleared is sent to Defence Acquisition Council for approval.
The allocation of ₹6.2 lakh crore is 4.72% higher compared to the Budget Estimates (BE) and marginally lower, -0.38%, than the Revised Estimates (RE) for 2023-24 and is 13.04% of the total Union Budget presented. Of this, 27.67% goes to capital, 14.82% for revenue expenditure on sustenance and operational preparedness, 30.68% for pay and allowances, 22.72% for defence pensions and 4.11% for civil organisations under MoD. The capital allocation, which is for new procurements, stood at ₹1.72 lakh crore, 5.78% higher than the BE of last year.
Budget data shows that from BE to RE of 2023-24, Defence Ministry returned ₹5,371.8 Crore from the capital component while it received an additional ₹28,548.61 Crore under revenue expenditure, other than salary, meant for sustenance and operational commitment. For FY 2024-25, the revenue allocation, minus pay and allowances, is ₹92,088 crore which the Ministry said is aimed at providing best maintenance facilities and support system to all platforms, including aircraft and ships. It also facilitates procuring of ammunition, mobility of resources, movement of personnel, catering to day-to-day expenditure of armed forces in strengthening the deployment in forward areas and keeping the forces always ready to take care of any eventuality, it stated.
Ms. Sitharaman in her budget speech announced a new scheme for development of deep tech for defence purposes. On this the MoD stated, “The announcement regarding a ₹1 lakh crore corpus for Deep Tech for long term loan to tech-savvy youth/companies and the tax advantage to the start-ups will give further impetus to innovation in the defence sector.”
On the capital allocation, the Ministry said that this was in line with the Long Term Integrated Perspective Plan (LTIPP) of the three Services aimed to fill the critical capability gaps through modernisation of the armed forces by “materialising some big ticket acquisitions in FY 2024-25.” The enhanced budgetary allocation will facilitate in equipping the armed forces with state-of-the-art, niche technology lethal weapons, fighter aircraft, ships, platforms, Unmanned Aerial Vehicles and specialist vehicles, it stated.
Planned modernisation of existing Su-30 fleet along with procurement of 12 more aircraft, acquisition of new engines for MiG-29 jets, C-295 transport aircraft under induction and missile systems will be funded out of the budget being allocated, according to the MoD. “Apart from this, to take the initiative of ‘Make in India’ further the Light Combat Aircraft (LCA) MK–I IOC/FOC configuration will be additionally funded to ensure state-of-the-art technology in domestic production. The Indian Navy projects such as acquisition of deck-based fighter aircraft, submarines, next generation survey vessels etc. will all materialise through this allocation.”
Also Read | Interim Budget 2024: Highlights
Infrastructure
Referring to the allocation for Border Roads Organisation (BRO), the Ministry referred to the “continued threat perception” faced at the India-China border, and said there continues a jump in the capital allocation. The allocation for BE 2024-25 is ₹6,500 crore, which is 30% higher than the allocation for BE 2023-24.
“The financial provision made during the budget this year, will, apart from promoting strategic infrastructural development in the border areas, also boost socio-economic development in that region along with promoting tourism,” it stated. Projects such as development of Nyoma air field in Ladakh at an altitude of 13,700 feet, permanent bridge connectivity to southernmost Panchayat of India in Andaman and Nicobar island, 4.1 km strategically important Shinku La tunnel in Himachal Pradesh and Nechiphu tunnel in Arunachal Pradesh are among the projects that would be funded out of this allocation.
Defence budget Estimates 2024-25
Total allocation for defence has gone up to ₹6.2 lakh crore
Revenue allocation: ₹2.83 lakh crore
Capital: ₹1.72 lakh crore
Pensions: ₹1.41 lakh crore
Civil: ₹25,563 crore
Compared to BE of 2023-24: 4.72%
Compared to RE of 2023-24: -0.38%
Defence budget points:
Total allocation for defence ₹6.21 lakh crore, 4.72% more than BE of 2023-24. This is 13.04% of total Union Budget presented by Finance Minister Nirmala Sitharaman
₹1.72 lakh crore - 27.67% of total defence budget - allocated for capital acquisition
Budget to armed forces for revenue expenditure (Other than Salary) stands at ₹92,088 crore
₹6,500 crore earmarked to strengthen border infrastructure;
₹7,651.80 crore allocated to Indian Coast Guard;
allocation to DRDO at ₹23,855 crore
FM announced a new ₹1 lakh crore corpus for Deep Tech for long term loan to youth/companies
