Presenting the Union Budget for 2024-25, Finance Minister Nirmala Sitharaman kept the defence allocation at Rs 6,21,940.85 crore (US $75 billion), a nominal hike of Rs 500 crore and virtually the same as the approved Rs 6,21,540.85 crore in the Interim Budget she presented on 1 February. However, there is a 30% hike in allocation to the Border Roads Organisation (BRO), signalling a major impetus to develop border infrastructure and increasing connectivity along the Line of Actual Control (LAC) in Ladakh, Arunachal, Sikkim bordering China.
“I am pleased that Border Roads have been given 30% increase in allocation over the last budget under the capital head. This allocation of Rs 6,500 Crore to BRO will further accelerate our Border Infrastructure,” said Defence Minister Rajnath Singh.
Out of the total allocation of Rs. 6,21,940.85 crore, 27.66% goes to capital, 14.82% is allocated for revenue expenditure on sustenance and operational preparedness, 30.66% is earmarked for Pay and Allowances, 22.70% for Defence Pensions, and 4.17% for civil organisations under the Ministry of Defence (MoD). This allocation represents approximately 12.90% of India’s budgetary estimate. The allocation aims to promote ‘Atmanirbharta’ in defence technology and manufacturing, equipping the Armed Forces with modern weapons/platforms and creating job opportunities for the youth, said the Defence Ministry.
“The capital outlay of Rs 1, 72,000 crore will further strengthen the capabilities of the Armed Forces. Earmarking of Rs 1 05,518.43 crore for domestic capital procurement will provide further impetus to Atmanibharta,” said Defence Minister.
The Finance Ministry has allocated an additional Rs 400 crore for innovation in defence through the Acing Development of Innovative Technologies with iDEX (ADITI) scheme while maintaining the allocation made to the Ministry of Defence during the interim budget. The ADITI scheme aims to engage with startups, MSMEs, and innovators to develop technological solutions for the Indian military. Under this scheme, a grant of up to 50% of the Product Development Budget will be awarded, with an enhanced limit of Rs 25 crore per applicant, in line with the existing iDEX guidelines.
“To boost the startup ecosystem in Defence Industries, Rs 518 crore has been allocated to iDEX scheme to fund technological solutions given by startups, MSMEs and innovators,” Singh said.
Focus on Modernisation
The budget allocation for the Defence Forces for FY 2024-25 is a significant Rs 1.72 lakh crore, representing a substantial 20.33% increase from the actual expenditure of FY 2022-23 and a noteworthy 9.40% rise from the Revised Allocation of FY 2023-24. This increased budget will address critical capability gaps through significant acquisitions in the current and subsequent fiscal years. The enhanced budgetary allocation will meet the annual cash outgo requirement for planned capital acquisitions, aimed at providing the Armed Forces with advanced niche technology, lethal weapons, fighter aircraft, ships, submarines, platforms, unmanned aerial vehicles, drones, specialist vehicles, and more.
Rs 1.05 lakh crore Reserved for Indian firms
In the current Financial Year (FY), the Ministry of Defense (MoD) has allocated 75% of the modernisation budget, totalling Rs 1,05,518.43 crore, for procurement from domestic industries. According to the Ministry, this allocation is expected to positively impact the GDP, generate employment, and contribute to capital formation, providing a boost to the economy.
Enhanced Allocation for Operational Readiness
The increased allocation for sustenance and operational readiness is set to boost the morale of the Armed Forces, ensuring they are battle-ready at all times. The government has allocated Rs 92,088 crore during the current fiscal year, which is 48% higher than the budgetary allocation of the previous fiscal year. This funding aims to provide top-notch maintenance facilities and support systems for all platforms, including aircraft and ships. The Ministry of Defence asserts that it will facilitate the procurement of ammunition, enable the mobility of resources and personnel as required by the security situation, and strengthen the deployment in forward areas for any unforeseen circumstances.
Bolstering Border Infrastructure for Strategic Requirements
The government is committed to enhancing border infrastructure by increasing funding for agencies involved in strategically important projects and providing essential connections in border areas. In the budget for 2024-25, the Border Roads Organizations (BRO) have been allocated Rs 6,500 crore for capital, a 30% increase from the previous fiscal year and a 160% increase from two years ago. This significant increase in funding will accelerate the pace of infrastructure development in border areas.
This increased financial provision will support infrastructure development in border areas and boost socio-economic development in the region. Projects such as the development of Nyoma Airfield in Ladakh, a permanent bridge to the southernmost Panchayat of India in Andaman and Nicobar Islands, the 4.1 km strategically important Shinku La tunnel in Himachal Pradesh, Nechiphu tunnel in Arunachal Pradesh, and other initiatives will receive funding from this allocation, leading to progress and prosperity, according to the Ministry.
Higher Allocation for Indian Coast Guard
The allocation to the Indian Coast Guard (ICG) for FY 2024-25 is Rs 7,651.80 crore, which is 6.31% higher than the FY 2023-24 allocation. Out of this amount, Rs 3,500 crore is designated for capital expenditure, specifically to enhance the ICG’s capabilities. This investment will enable the acquisition of fast-moving patrolling vehicles/interceptors, advanced electronic surveillance systems, and weapons. These enhancements will better equip the ICG to address emerging maritime challenges and provide humanitarian assistance to other nations.
Self-reliance through Research & Innovation
The budget allocation for the Defence Research and Development Organisation (DRDO) has been increased to Rs 23,855 crore in FY 2024-25 from Rs 23,263.89 crore in FY 2023-24. Out of this allocation, Rs 13,208 crore is allocated for capital expenditure, which will strengthen DRDO’s financial capacity to develop new technologies, focusing on fundamental research and supporting private entities through Development-cum-production partnerships. Rs 60 crore has also been allocated to the Technology Development Fund (TDF) scheme to help start-ups, MSMEs, and academia collaborate with DRDO in niche technology development.
Moreover, the Government has raised the allocation for innovation in defence through iDEX from Rs 115 crore in FY 2023-24 to Rs 518 crore in the current fiscal year. This boost will aid start-ups, MSMEs, and innovators in developing Defence Technology (Def-Tech) solutions and will attract young, innovative minds.
Defence Pension Keep Increasing at Rs 1.41 lakh crore
The budget for defence pensions has been increased to Rs 1.41 lakh crore. This substantial amount, totalling Rs 1,41,205 crore, is 2.17% higher than the allocation made in 2023-24. It will be used to provide monthly pensions for a staggering thirty-two lakh pensioners through the System for Pension Administration (Raksha) or SPARSH and other pension disbursing authorities.
Ravi Shankar
