Rs. 6.22 lakh crore allocated to MoD, highest among Ministries, in Regular Union Budget 2024-25; 4.79% higher than FY 2023-24

• 1.72 lakh crore allocated for capital acquisition; Rs. 92,088 crore for for sustenance & operational readiness

• Defence Pension Budget increased to Rs. 1.41 lakh crore; Rs. 6,968 crore earmarked for ECHS

• 6,500 crore allocated for border roads development; Rs. 7,651 crore for coastal security

• Budgetary allocation for iDEX enhanced to Rs. 518 crore from Rs. 115 crore in FY 2023-24 to promote innovation

• The Budget will help in moving towards a prosperous & self-reliant ‘Viksit Bharat’: Defence Minister Rajnath Singh

• “Defence budget will further strengthen Armed Forces & provide impetus to ‘Aatmanibharta’ in defence”

New Delhi, July 23. The Narendra Modi government on July 23 allocated a whopping Rs. 6.21 lakh crore (approximately US $75 billion) for Defence Ministry, the highest among all the other Ministries of the Government of India. In the Budget proposals presented in Parliament Finance Minister Nirmala Seetharaman the total outlay is up from the previous years’ Rs. 5.94 lakh crore. The capital outlay is kept at Rs. 1.72 lakh crore with total allocation of 12.9 per cent of the total budget for the financial year 2024-25.

Defence Minister Rajnath Singh termed the full year Budget as excellent and outstanding, which will help in moving towards a prosperous and self-reliant ‘Viksit Bharat’. In a post on X, he 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 $five trillion economy by 2027, he added.

The latest Budget maintained the allocation made to the Ministry during the interim budget earlier this year and made an additional allocation of R 400 crore (approx. $ 5bn) on innovation in defence.in defence through the Acing Development of Innovative Technologies with iDEX (ADITI) scheme.

Through this scheme, the Ministry engages with start-ups/MSMEs and innovators to develop Def-Tech solutions and supply the Indian military with innovative and indigenous technological solutions. A grant of upto 50 per cent of Product Development Budget with enhanced limit (Max) of Rs. 25 crore per applicant will be awarded as per extant iDEX guidelines.

The allocation to MoD for current financial year is higher by approx. Rs. one lakh crore (18.43%) over the allocation for FY 2022-23 and 4.79% more than allocation of FY 2023-24. Out of this, a share of 27.66% goes to capital; 14.82% for revenue expenditure on sustenance and operational preparedness; 30.66% for Pay and Allowances; 22.70% for Defence Pensions, and 4.17% for civil organisations under MoD. The total allocation comes out as approx. 12.90% of Budgetary Estimate of Union of India, an official release said.

The allocation is aimed to promote ‘Aatmanirbharta’ in defence technology & manufacturing and equipping the Armed Forces with modern weapons/platforms along with creation of job opportunities for the youth.

Modernisation of the forces at the core

In absolute terms, budgetary allocation under capital head to the Defence Forces for FY 2024-25 is Rs. 1.72 lakh crore, which is 20.33% higher than the actual expenditure of FY 2022-23 and 9.40% 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 FYs. 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, specialist vehicles etc.

Strengthening domestic capacity

MoD has earmarked 75% of modernisation budget amounting to Rs. 1,05,518.43 crore for procurement through domestic industries during this FY. This will have a multiplier effect on GDP, employment generation and capital formation, thus providing a stimulus to the economy.

Enhanced allocation for sustenance and operational readiness

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 Government has allocated Rs. 92,088 crore during the current FY under this head, which is 48% higher than the budgetary allocation of FY 2022-23. This is aimed to provide 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.

Ensuring better healthcare facilities to veterans

The Government is committed to provide best healthcare facilities to the veterans and their dependents through enhanced allocation to Ex-Servicemen Contributory Health Scheme (ECHS). In the regular budget for FY 2024-25, Rs. 6,968 crore has been allotted to ECHS which is 28% higher than the previous year allocation. This follows the significantly higher allocation at revised estimate stage during the FY 2023-24 when the allocation to ECHS was enhanced by 70 % over BE.

Bolstering Border Infrastructure for strategic requirements

The Government is firm on its commitment to improve border infrastructure through higher allocation to the agencies involved in executing strategically-significant projects along with providing last-mile connectivity in the border areas. In this endeavor, the budgetary allocation to Border Roads Organisations (BRO) under capital for Budget Estimates (BE) 2024-25 has been made as Rs. 6,500 crore, which is 30% higher than the allocation for FY 2023-24, and 160% higher over the allocation of FY 21-22.

The financial provision made during the budget this year will promote strategic infrastructure development in border areas, while boosting socio-economic development in that region. Projects such as development of Nyoma Airfield in Ladakh at an altitude of 13,700 feet, permanent bridge connectivity to southernmost Panchayat of India in Andaman and Nicobar Islands, 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.

Enhancing the capability of Indian Coast Guard

The allocation to the Indian Coast Guard (ICG) for this FY 2024-25 is Rs. 7,651.80 crore, which is 6.31% higher over the allocation of FY 2023-24. Out of this, Rs. 3,500 crore is to be incurred only on capital expenditure, adding teeth to the arsenal of ICG for addressing the emerging maritime challenges and providing humanitarian assistance to other nations. The allocation will facilitate the acquisition of fast-moving patrolling vehicles/interceptors, advance electronic surveillance system and weapons.

Self-reliance through research and innovation

The budgetary allocation to Defence Research and Development Organisation (DRDO) has been increased to Rs. 23,855 crore in FY 2024-25 from Rs. 23,263.89 crore in FY 2023-24. Out of this allocation, a major share of Rs. 13,208 crore is allocated for capital expenditure. This will financially strengthen the DRDO in developing new technology with special focus on fundamental research and hand-holding of the private parties through Development-cum-production partner. The allocation to Technology Development Fund (TDF) scheme stands out to be Rs. 60 crore which is specially designed for new start-ups, MSMEs and academia attracting the young bright minds interested in innovation and developing niche technology in collaboration with DRDO.

The Government has increased the allocation on innovation in defence through iDEX from Rs. 115 crore during FY 2023-24 to Rs. 518 crore in the current fiscal year, which will boost start-ups/MSMEs/innovators in developing Def-Tech solutions and invite young ignited minds.

Defence Pension Budget increased to Rs. 1.41 lakh crore

Total budgetary allocation on account of defence pensions is Rs. 1,41,205 crore which is 2.17% higher than the allocation made during 2023-24. It will be incurred on monthly pension to approx. 32 lakh pensioners through System for Pension Administration (Raksha) or SPARSH and through other pension disbursing authorities.