Defence Budget soars to new heights at Rs 6.21 lakh crore for FY 2024-25
New Delhi: The Ministry of Defence (MoD) has secured a record allocation in the Union Budget for the Financial Year 2024-25. The Defence Budget for the upcoming fiscal year has reached an unprecedented Rs 6,21,540.85 crore, constituting a substantial 13.04 per cent share of the total Union Budget.
This remarkable surge, exceeding one lakh crore (18.35 per cent) compared to the FY 2022-23 allocation, reflects a 4.72 per cent increment from the previous fiscal year, FY 23-24. A significant proportion, accounting for 27.67 per cent of the budget, is earmarked for capital expenditure, underscoring the government’s steadfast commitment to achieving self-reliance in defence manufacturing and technology.
This focus on capital spending is geared towards equipping the armed forces with cutting-edge weaponry, including fighter aircraft, ships, platforms, unmanned aerial vehicles, and specialist vehicles. The Defence Budget for FY 24-25 is strategically aligned to support crucial modernisation initiatives. These initiatives encompass the planned overhaul of the Su-30 fleet, the procurement of advanced engines for existing MiG-29s, the acquisition of transport aircraft C-295, and missile systems. Additionally, there is a reinforced commitment to the ‘Make in India’ initiative, with additional funding allocated for the LCA MK–I IOC/FOC configuration, ensuring state-of-the-art technology in domestic production. The government’s emphasis on jointness among the services is evident in consolidating demand, streamlining expenditure categories such as Land, Aircraft, and Aeroengines, and fostering flexible financial management.
In a strategic move, the allocation for Revenue Expenditure (Other than Salary) for operational readiness witnesses a substantial 48 per cent increase, reaching Rs 92,088 crore for FY 24-25. This allocation is aimed at addressing maintenance, support systems, ammunition procurement, and mobility, ensuring the armed forces are prepared for any eventuality. Underlining the government’s commitment to the welfare of retired personnel, the Defence Pension Budget has been increased to Rs 1.41 lakh crore. Additionally, an unprecedented allocation of Rs 6,968 crore to the Ex-Servicemen Welfare Scheme emphasises the government’s focus to providing healthcare facilities for veterans and their families. The ministry added, ‘Total Budgetary allocation on account of Defence pensions is Rs 1,41,205 crore which is 2.17 per cent higher than the allocation made during 2023-24. It will be incurred on monthly pension to approx. 32 lakh pensioners through SPARSH and other pension disbursing authorities.’
Further, the Budget added, ‘The total allocation to Ex-Servicemen Welfare Scheme for FY 2024-25 is 28 per cent higher than the allocation for FY 23-24 (From Rs 5,431.56 crore to Rs 6,968 crore). This is in addition to the unprecedented allocation at the revised estimate stage during the current year where the budgetary allocation to ECHS was enhanced by 70 per cent over BE of 2023-24 and was made to Rs 9,221.50 crore.’
This significantly higher allocation is to take care of Medical Treatment Related Expenditure (MTRE) incurred during the COVID period and to compensate for the increase in ECHS rates bringing it at par with the CGHS rates. This is in line with providing the best healthcare facilities to Ex-Servicemen, War veterans, Veer naris and their family members. Amidst the ongoing security concerns along the Indo-China border, there is a notable increase in the Capital Budget allocation for the Border Roads Organisation. The allocated budget for the financial year 2024-25 stands at Rs 6,500 crore, marking a significant 30 per cent rise compared to the allocation for FY 23-24 and an impressive 160 per cent increase over the allocation in FY 2021-22. This substantial increase underscores the government’s unwavering commitment to enhancing border infrastructure. The Defence Budget further emphasises that the financial provision made in this year’s budget not only aims to promote strategic infrastructural development in border areas but also envisions fostering socio-economic growth in the region, along with promoting tourism. The allocated funds will be directed towards various key projects, including the development of Nyoma Airfield in Ladakh at an altitude of 13,700 feet, establishing permanent bridge connectivity to the southernmost Panchayat in the Andaman and Nicobar Islands, constructing the strategically significant 4.1 km Shinku La tunnel in Himachal Pradesh, the Nechiphu tunnel in Arunachal Pradesh, and several other crucial initiatives.
This allocation is poised to play a pivotal role in fortifying border regions and facilitating comprehensive development in these strategically significant areas.The Indian Coast Guard received Rs 7,651.80 crore for FY 24-25, with Rs 3,500 crore dedicated to capital expenditure, enhancing its capabilities to address emerging challenges in water and provide humanitarian assistance. The financial allocation for the Defence Research and Development Organisation (DRDO) has experienced a boost, reaching Rs 23,855 crore for the fiscal year 2024-25, up from Rs 23,263.89 crore in FY 2023-24. Notably, a substantial portion of this allocation, amounting to Rs 13,208 crore, is designated for capital expenditure. This infusion of funds is poised to enhance DRDO’s financial capabilities, particularly in advancing new technologies, with a special emphasis on fundamental research and fostering collaboration with private entities through the Development-cum-production partner model. The Technology Development Fund (TDF) scheme stands out within this allocation, with a dedicated amount of Rs 60 crore. This scheme is uniquely crafted to support new startups, Micro, Small, and Medium Enterprises (MSMEs), and academia, to attract young and innovative minds interested in developing niche technologies in the defence sector in collaboration with DRDO.An additional noteworthy announcement is the creation of a Rs 1 lakh crore corpus for Deep Tech, intended for providing long-term loans to technology-savy youth and companies. This initiative, coupled with tax advantages for startups, is expected to provide a significant boost to innovation within the defence sector. The finance minister Nirmala Sitharaman also mentioned in her Budget speech that the allocation signals a proactive approach by the government to encourage and support technological advancements, fostering a dynamic environment for innovation and collaboration between DRDO and the private sector.
Defence Minister Rajnath Singh praised the interim Budget as ‘positive’ and ‘encouraging.’ He emphasised that the increased capital expenditure outlay is a massive push towards making India a five-trillion-dollar economy by 2027. Minister Singh highlighted that the Defence Budget for FY 2024-25 reflects India’s commitment to enhancing its defence capabilities, promoting self-reliance, and addressing evolving security challenges on multiple fronts.
