During her seventh Union Budget presentation, Union Finance Minister Nirmala Sitharaman proposed allocating the exact amount of Rs 6.21 lakh crore, which was allocated in the Interim Budget five months ago, towards the defense sector for FY 2024-25. This demonstrates the government's ongoing commitment to enhancing national security and bolstering the country's defense capabilities.

Highest Ever Allocation to Defence

Defense Minister Rajnath Singh thanked the huge allocation and said it was the highest ever budget accorded to the Ministry of Defence. "I thank the Finance Minister for allocating Rs 6,21,940.85 crore, which accounts for 12.9% of the total central budget for FY 2024-25", Singh said.

The Budget provided Rs 1.72 lakh crore for capital outlays, aimed at modernizing the Armed Forces. Mr Singh said this capital outlay would ‘substantially enhance military capabilities’, while also mentioning that of this, Rs 1,05,518.43 crore was related to domestic procurement and furthering the Atmanirbharta initiative.

Improvements in Border Infrastructure

Quite significantly, the Border Roads Organisation has been given a 30% increase to Rs 6,500 crore. "This 30% rise in allocation from the previous budget will give greater momentum in our border infrastructure", Singh said.

Veterans' Welfare

The outlay for the Ex-Servicemen Contributory Health Scheme has been increased to Rs 6,968 crore for FY 2024-25, which is a 28% increase from the previous year. This follows a significant 70% hike during the revised estimate stage in FY 2023-24.

Support for Defence Innovation

Budgeting Rs 518 crore for the Innovations for Defence Excellence (iDEX) scheme is aimed at developing defence technologies in the country by startups, MSMEs, and innovators. "The share will help galvanize the startup ecosystem in the Defence Sector", said Singh.

Revised Defence Allocation

The defense budget for FY24 was revised to Rs 6.24 lakh crore from Rs 5.94 lakh crore in February. An interim allocation of Rs 5.93 lakh crore for FY25 was announced on Friday, which is slightly lower but still the highest for any ministry, accounting for almost 13 percent of the total Central budget. This amount is still below 2 percent of India's GDP. The capital expenditure for new equipment and technology has been set at Rs 1.72 lakh crore, which accounts for 27.67 percent of the overall defense budget.

Detailed Breakup of Budget

Out of the total, Rs 1.72 lakh crore has been allocated for capital acquisitions, which accounts for almost 28 percent of the defense budget. The revenue expenditure of the armed forces, excluding salaries and allowances, has been set at Rs 92,088 crore. Additionally, the defense pension bill has been addressed by allocating Rs 1.41 lakh crore, marking an 18.4 percent increase from the previous year. The Indian Coast Guard has been allocated Rs 7,651.80 crore, and the DRDO has been allocated Rs 23,855 crore.

Record in Defence Production

India's defense production acounted a record Rs 1.27 lakh crore for 2023-24, up from Rs 1.09 lakh crore in the previous year. Domestic production of over 12,300 items has been made necessary with the efforts of the Ministry of Defence towards 'indigenisation' in the past three years. This initiative categorically establishes a domestic defence industry.

Future Procurement and Export Goals

The Indian armed forces are likely to spend around $130 billion on capital procurement in the next five to six years. The government wants to reduce dependence on imports and hence push domestic manufacturing. The Ministry of Defence has set a target of $25 billion in turnover in defence manufacturing in the next five years and aims to take military hardware exports up from Rs 21,083 crore to Rs 50,000 crore by 2028-29.

Economic Growth and Employment

The Finance Minister Sitharaman, in her budget speech, reiterated that the government was undertaking this allocation on the back of economic growth and employment generation. A fat Rs 2 trillion ($24 billion) was set aside for creating jobs over the next five years. She said, "India's economic growth remains robust and will continue to be a beacon of stability with low and stable inflation moving towards the 4% target".