Defence gets Rs 6.21 lakh cr, 4.79% hike from previous allocation

India on Tuesday set aside Rs 6.22 lakh crore as defence outlay for 2024-25 in a meagre increase of 4.79 percent over the previous fiscal's budgetary allocation amid the lingering border row with China in eastern Ladakh and concerns over frequent Chinese forays into the Indian Ocean Region.

The total outlay is almost the same as in the interim budget in February and it is marginally less than the revised estimates of Rs 6.23 lakh crore for 2023-24.

A total of Rs 1.72 lakh crore was set aside for the military for capital expenditure that largely includes purchasing new weapons, aircraft, warships and other military hardware.

Defence Minister Rajnath Singh said Rs 1,05,518 crore (Rs 1.05 lakh crore) has been earmarked for domestic capital procurement and it will provide further impetus to self-reliance in defence production.

On the capital outlay, the defence ministry said Rs 92,088 crore has been set aside for sustenance and operational readiness.

"As far as the allocation to the ministry of defence is concerned, I thank the finance minister for giving the highest allocation to the tune of Rs 6,21,940 crore, which is 12.9 percent of total budget of the government for 2024-25," Singh said on X.

The overall defence outlay without considering the pension bill of Rs 1.41 lakh crore works out to around just 1.9 percent of projected GDP for 2024-25.

In terms of pure numbers, the total defence outlay in the Union budget is Rs 6,21,940 crore (approximately $75 billion). The budgetary outlay for defence in 2023-24 was Rs 5,93,537 crore while the revised estimates put the amount at Rs 6,23,889 crore.

In 2023-24, the budgetary allocation for capital outlay was Rs 1.63 lakh crore while the revised estimates put the amount at Rs 1.57 lakh crore.

For 2024-25, the revenue expenditure that accounts for day-to-day operating costs and salaries has been pegged at Rs 2.82 lakh crore while Rs 1,41,205 crore has been set aside for defence pensions.

The total allocation made for defence in the interim budget in February was Rs 6,21,540 crore.

On the capital outlay, the defence ministry said the allocation is aimed at filling the critical capability gaps through big ticket acquisitions in current and subsequent years.

"The enhanced budgetary allocation will fulfill the requirement of annual cash outgo on planned capital acquisitions aimed at equipping the armed forces with state-of-the-art niche technology, lethal weapons, fighter aircraft, ships, submarines, platforms, unmanned aerial vehicles, drones and specialist vehicles," it said.

The ministry of defence has earmarked 75 percent of the modernisation budget amounting to Rs 1,05,518.43 crore for procurement through domestic industries, it said.

"In absolute terms, budgetary allocation under capital head to the defence forces for 2024-25 is Rs 1.72 lakh crore, which is 20.33 percent higher than the actual expenditure of 2022-23 and 9.40 percent more than the revised allocation of 2023-24," the ministry said in a statement.

It further said: "The continued higher allocation for operational readiness boosts the morale of the armed forces with the sole motive of keeping them battle ready at all times."

The ministry said the government has allocated Rs 92,088 crore during the current financial year under this head.

"This is aimed to provide the best maintenance facilities and support system to all platforms including aircraft and ships. It will facilitate procurement of ammunition; mobility of resources personnel as demanded by the security situation, and strengthen the deployment in forward areas for any unforeseen situation," it said.

The budgetary allocation to Border Roads Organisations under capital head has been proposed at Rs 6,500 crore.

The outlay to Defence Research and Development Organisation has been increased to Rs 23,855 crore in 2024-25 from Rs 23,263 crore in 2023-24.

Out of the total capital outlay, an amount of Rs 40,277 crore was kept for aircraft and aero engines, Rs 62,198 under the head "other equipment' and Rs 13,208 crore was set aside under emergency authorisation for newly created defence public sector undertakings.

An amount of Rs 23,800 crore was kept under the head "naval fleet" and Rs 6,830 crore for naval dockyard/ projects. A total of Rs 4637 crore was set aside for heavy and medium vehicles.

Unlike previous budgets, no separate allocation for capital outlay was made to the Army, Navy and the Air Force.

On the allocation for defence spending, Singh exuded confidence that the capital outlay of Rs 1,72,000 crore will further strengthen the capabilities of the armed forces.

He also hoped that the earmarking of Rs 1,05,518.43 crore for domestic capital procurement will provide further impetus to the 'Aatmanibharta' (self-reliance) in defence.

The allocation to the Indian Coast Guard for 2024-25 has been pegged at Rs 7,651 crore, which is 6.31 per cent higher over the outlay in the previous fiscal.

Out of this, Rs 3,500 crore is to be incurred only on capital expenditure, the defence ministry said.

The allocation will facilitate the acquisition of fast-moving patrolling vehicles, interceptors, advanced electronic surveillance systems and weapons, it said.

Singh described the overall budget for financial year 2024-25 as "excellent and outstanding", which he said will help India move towards a prosperous and self-reliant 'Viksit Bharat'.

In a post on X, he stated that inspired by Prime Minister Narendra Modi's vision of inclusive and fast-paced development, the budget will accelerate the country's economic transformation.

It will go a long way in making India a $5 trillion economy by 2027, he added.