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Budget 2023: Defence gets 13% more than last yr. Pensions & salaries almost half of funds pie

Capital budget increased to Rs 1.62 lakh crore from 1.52 lakh crore. Navy, Army see substantial increase but allocation for procuring aircraft, aero engines goes down.

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New Delhi: India’s defence budget for 2023-24 increased by 12.95 per cent from last year’s allocation of Rs 5.25 lakh crore to Rs 5.93 lakh crore, with pension constituting a whopping Rs 1.38 lakh crore and salaries of uniformed personnel and civilians amounting to about Rs 1.54 lakh crore.

This mean salaries and pension itself comprise nearly half of the defence budget that accounted for 13.18 per cent of the total expenditure listed out by Union Finance Minister Nirmala Sitharaman and 2.17 per cent of the GDP, which is estimated at Rs 273.08 lakh crore for the financial year 2022-23. Last year, Rs 1.19 lakh crore was allocated for defence pensions.

The capital budget, that caters to the modernisation needs of the armed forces like buying of new equipment and fire power, has seen a modest increase of 6.57 per cent by Rs 10,000 crore, taking it up from 1.52 lakh crore in the current fiscal to Rs 1.62 lakh crore for the new financial year.

Interestingly, the revised estimates of the current capital budget showed it was reduced to Rs 1.50 lakh crore. A closer look showed that the Indian Air Force (IAF) was not able to spend the Rs 55,586 crore meant for modernisation and surrendered about Rs 2,000 crore.

Sources in the defence establishment said that the 6.57 per cent increase in capital allocation has to be also seen in context of the rise in dollar’s value which was about Rs 75 per dollar last year and now at Rs 81.

India accounted for 11 per cent of global arms imports in 2017-21 and continues to be one of the biggest importers despite the government limiting 68 per cent of the capital procurement to Indian firms.

The budget documents showed that while the money allotted under pensions for the current fiscal was Rs 1.19 lakh crore, it increased to Rs 1.53 lakh crore under revised estimates.

“The increase in pension bill was due to the revision of the One Rank One Pension (OROP) scheme,” a source said, pointing out that it will result in an additional annual expenditure of Rs 8,450 crore, apart from payment of arrears amounting to Rs 23,638 crore.

As far as the allocation for capital budget is concerned, the Navy and the Army have seen substantial increase in their budget amid ongoing tensions with China as well as a full-fledged modernisation drive.

Both the Navy and the Army are looking at procuring a host of new technologies including specialised drones, loitering munitions, small arms, light tanks, upgrade of existing tanks and armoured personnel carriers besides new naval fighters.

The capital budget for the Navy increased from Rs 47,590.99 crore in budgetary estimates to Rs 52,804.75 crore for the next fiscal. The revised estimates for the current fiscal put the capital outlay at Rs 47,727 crore, which meant that it spent Rs 137 crore more than what was originally allotted.

In the case of the Army, the capital budget increased from Rs 32,015.23 crore to Rs 37,241.54 crore. Revised estimates for the current fiscal showed that the Army spent over Rs 500 crore more than what was initially allotted in the current fiscal.

However, in the case of the IAF, the budget for the new fiscal saw only a marginal increase as it went up from Rs 55,586.65 crore to Rs 57,137.09 crore.

Closer analysis showed that the allocation for procuring additional equipment besides fighter planes saw the maximum hike. From Rs 26,624 crore last year, it increased to Rs 36,223 crore this year. Sources explained that the category takes care of acquisition of new missiles and drones, besides other niche technologies.

Incidentally, money allotted for procuring aircraft and aero engines has been reduced. While it was Rs 18,966 crore for the current fiscal, the Finance Minister reduced it to Rs 15,721 crore in the new financial year.

Sources explained that this meant that the IAF’s plan to go in for procurement of 114 Multi Role Fighter Aircraft (MRFA) is unlikely to materialise in the new financial year because contract signing itself would need 10 per cent of the total cost to be paid upfront.

Also Read: How France is ready to help India diversify from Russia — build fighters to submarines

Boost to revenue budget, BRO 

In a statement, the defence ministry said non-salary revenue outlay was enhanced significantly from Rs 62,431 crore in Budget Estimates (BE) 2022-23 to Rs 90,000 crore in BE 2023-24, representing a 44 per cent jump.

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, it added.

As a precursor to this increase in the non-salary revenue segment, the government during the mid-term review had enhanced the operational allotments of the current financial year by Rs 26,000 crore, which works out as 42 per cent of the present allocation.

This unprecedented increase in the Revised Estimates 2022-23 ensured liquidation of the entire carry over liabilities during the current year thereby ensuring that there is no dent in the next year’s operational outlay of the Services, the defence ministry said.

The enhanced allocations will also cater to training aids and simulators for Agniveers and ensure that they achieve the set standards of training for induction in the defence forces,
it added.

The capital budget of Border Roads Organisation (BRO) was increased by 43 per cent to Rs 5,000 crore in financial year 2023-24 as against Rs 3,500 crore in 2022-23.

The allocation to Defence Research and Development Organisation (DRDO) was enhanced by 9 per cent, with a total allocation of Rs 23,264 crore in BE 2023-24.

(This is an updated version of the copy.)

(Edited by Tony Rai)

Also Read: Budget 2023: Defence eyes big boost for more firepower, submarines, drones


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