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The Indian military’s modernisation budget for 2024-25 saw a meagre hike of 6.17 per cent despite the ongoing standoff with China along the Line of Actual Control in eastern Ladakh and a slew of terror attacks on security forces in Jammu and Kashmir last year.
Moreover, the defence budget for the upcoming financial year has not made public the individual capital budgetary allocations for the Army, Navy, and the Indian Air Force, which has been the norm in the previous years and brought out a consolidated capital budget for the three services.
The overall defence budget earmarked for 2024-25 stands at Rs 6.2 lakh crore, including defence pensions of Rs 1.41 lakh crore — up by just 4.3 per cent from Rs 5.94 lakh crore allocated in the previous fiscal. This is 13.04 per cent of the total budget outlay for 2024-25.
In her budget speech, finance minister Nirmala Sitharaman also announced a Rs 1 lakh crore corpus for deep technology for long-term loan to tech-savvy youths or companies and the tax advantage to start-ups aimed at giving an impetus to innovation in the defence sector.
The capital budgetary allocations to the three defence services for 2024-25 stand at Rs 1.72 lakh crore — up from Rs 1.62 lakh crore in the previous fiscal.
According to sources, the meagre rise in the modernisation budget is attributed to the limited new contracts being signed by the Armed Forces and slippages in scheduled payments and deliveries. This is also reflected in the revised estimates of the capital budget for 2023-24 at Rs 1.57 lakh crore, which was lower than the Rs 1.62 lakh crore allocated in that fiscal.
In a statement, the defence ministry said the planned modernisation of existing Su-30 fleet, along with additional procurement of aircraft, acquisition of advanced engines for existing MiG-29, acquisition of transport aircraft C-295 and missile systems will be funded out of the budget being allocated. It added that Navy projects such as acquisition of deck-based fighter aircraft, submarines, next-generation survey vessels and others will materialise through this allocation.
Even the overall revenue budget for defence, which includes the pay and allowances for the Armed Forces and also allocations for stocking up on fuel, ammunition, and maintenance of assets, through procurement of critical spares and other capabilities, saw a limited hike at Rs 2.82 lakh crore from Rs 2.7 lakh crore in the previous fiscal. This also includes an allocation of Rs 5,979 crore towards the Agnipath scheme under the three services.
The defence ministry, however, said the revenue expenditure (other than salary), which is meant for sustenance and operational commitment, stands at Rs 92,088 crore. This, it added, is 48 per cent higher than the budgetary allocations for 2022-23.
The defence budget has not disclosed individual capital budgetary allocations for the three defence services. According to the defence ministry, the decision to do so was consciously taken to foster “jointness” among the services by consolidating the demands of the three services into similar items of expenditure such as land, aircraft and aeroengines, heavy and medium vehicles and others.
“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,” it said, adding that this mechanism will also expedite decision making and ensure better utilisation of the capital budget.
The defence pensions budget saw a hike of around two per cent to Rs 1.41 lakh crore. In the last fiscal, it had seen a 16 per cent hike, considering the increased pensions with the revision of the One Rank One Pension scheme and the arrears worth Rs 28,138 crore.
Other highlights of the budget include a 30 per cent hike to the works budget of Border Roads Organisation under the Ministry of Defence to Rs 6,500 crore this year in the backdrop of a spurt in infrastructure development in the border areas in the last three years.
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, Nechiphu tunnel in Arunachal Pradesh, and many other projects will be funded out of this allocation, the defence ministry said.
Allocation to the Indian Coast Guard (ICG) for 2024-25 is Rs 7.651.8 crore, which is 6.31 percent higher over the allocation of 2023-24. Of this, Rs 3,500 crore is to be incurred only on capital expenditure. The total allocation to Ex-Servicemen Welfare Scheme for 2024-25 is 28 per cent higher than the allocations made for the previous fiscal and stands at Rs 6,968 crore.
The budgetary allocation to Defence Research and Development Organisation (DRDO) has been increased to Rs 23,855 crore in 2024-25 from Rs 23,263.89 crore in the previous fiscal.
