Defence budget falls below 2% of GDP, emphasis on border infrastructure

The air force has the largest share of the capital budget, followed by the navy and the army in that order

 

By Ajai Shukla

Business Standard, 2nd Feb 23

 

For the first time in decades, India’s defence allocations have dropped below two per cent of the nominal Gross Domestic Product (GDP).

 

Of the Union Budget’s total outlay of Rs 45,03,097 crore for Financial Year 2023-24, the Ministry of Defence has been allocated Rs 593,373 crore. This amounts to 1.97 per cent of GDP, or 13.2 per cent of government spending. 

The defence budget includes an allocation of Rs 138,205 crore for defence pensions, which have fallen significantly for the first time this decade. Last year’s pension allocations were Rs 153,414 crores. 

 

The defence allocations for 2023-24 represent an enhancement of Rs 68,371 crore, or 13 per cent, over the budget allocations of 2022-23. However, if this year’s allocations are compared with the revised allocations of 2022-23, the rise is a miniscule 1.5 per cent.

 

The defence capital outlay for equipment modernisation and infrastructure development has increased to Rs 171,375 crore. The government has portrayed this as a 57 per cent rise since 2019-20. However, compared to last year’s budget allocations, the capex has been raised by just 7 per cent.

 

To be able to support small, high-technology industries and start-ups, the iDEX scheme (innovations for defence excellence) has been given Rs 116 crore.

 

Defence Minister Rajnath Singh has termed the Union Budget of 2023-24 growth-oriented. He has said this will help in making India a $5 trillion economy within a few years.

 

In order to keep the armed forces battle-ready, the non-salary portion of the revenue outlay has been enhanced by 44 per cent from Rs 64,869 crore in the budget estimates for 2022-23; to just over Rs 90,000 crore in the coming year.

 

“This expenditure is expected to close critical gaps in the combat capabilities and equip the forces in terms of ammunition, sustenance of weapons and assets, military reserves etc.,” the defence ministry said.

 

While the 1.3-million-strong army has been allocated a lion’s share of the revenue and pension budgets, the Indian Air Force has got the biggest share of the capital allocation: Rs 57,137 crore. The navy has been allocated Rs 52,805 crore, while the army will make do with the smallest capital budget: Rs 37,242 crore.

 

The defence ministry says a key thrust of the Budget was towards infrastructure strengthening, particularly along the Sino-Indian border. For this, the capital allocation to the Border Roads Organisation (BRO) has been increased by 43 per cent, from Rs 3,500 crore in FY 2022-23 to to Rs 5,000 crore in FY 2023-24. The defence ministry says the BRO’s allocation had doubled in the two years since FY 2021-22.

 

“This will boost border infrastructure, thereby creating strategically important assets like Sela Tunnel, Nechiphu Tunnel and the Sela-Chhabrela Tunnel,” said the defence ministry in a press release.