Budget hikes defence allocation by 4.79 pc to Rs 6.22 lakh crore

New Delhi, July 23 : The Union Budget 2024-25 has allocated Rs 6.22 lakh crore for the Ministry of Defence (MoD), the highest among all the ministries.

The allocation aims to promote ‘Aatmanirbharta’ in defence technology and manufacturing, and equip the armed forces with modern weapons/platforms along with the creation of job opportunities for the youth.

While maintaining the allocation made to the MoD during the interim Budget, the government has earmarked an additional outlay of Rs 400 crore in the Union Budget presented on Monday by Finance Minister Nirmala Sitharaman on innovation in defence through the Acing Development of Innovative Technologies with iDEX (ADITI) scheme.

The scheme enables the Defence Ministry to engage with startups/MSMEs and innovators to develop Def-Tech solutions and supply the Indian military with innovative and indigenous technological solutions.

A grant of up to 50 per cent of Product Development Budget with an enhanced limit (maximum) of Rs 25 crore per applicant will be awarded as per the extant iDEX guidelines.

The allocation to the MoD for FY 2024-25 is higher by approximately Rs 1 lakh crore (18.43 per cent) over the allocation for FY 2022-23 and 4.79 per cent more than the allocation for FY 2023-24.

Out of this, a share of 27.66 per cent goes to capital; 14.82 per cent to revenue expenditure on sustenance and operational preparedness; 30.66 per cent for pay and allowances; 22.70 per cent to defence pensions, and 4.17 per cent to civil organisations under the MoD.

The total allocation works out to around 12.9 per cent of the Budgetary Estimates of the Union of India.

In absolute terms, Budgetary allocation under the capital head to the defence forces for FY 2024-25 is Rs 1.72 lakh crore, which is 20.33 per cent higher than the actual expenditure of FY 2022-23 and 9.40 per cent more than the Revised Allocation of FY 2023-24.

The allocation is aimed to fill the critical capability gaps through big-ticket acquisitions in current and subsequent financial years.

The enhanced budgetary allocation will fulfil the requirement of the 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, specialist vehicles, etc., the Defence Ministry said.

The MoD has earmarked 75 per cent of modernisation Budget amounting to Rs 1.06 lakh crore for procurement through domestic industries during FY25. This will have a multiplier effect on GDP, employment generation, and capital formation, providing a stimulus to the economy.

The allocation to the Indian Coast Guard (ICG) for FY 2024-25 is Rs 7,651.80 crore, which is 6.31 per cent higher over the allocation for FY 2023-24. Out of this, Rs 3,500 crore is to be incurred only on capital expenditure.

Defence Minister Rajnath Singh termed the full-year Budget for FY 2024-25 as excellent, which will help move towards a prosperous and self-reliant ‘Viksit Bharat’.

In a post on X, Rajnath SIngh said 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.

Rajnath Singh also exuded confidence that the capital outlay of Rs 1,72,000 crore will further strengthen the capabilities of the armed forces, as he hoped that the earmarking of Rs 1,05,518.43 crore for domestic capital procurement will provide further impetus to ‘Aatmanibharta’ in the defence sector.