Union Budget: Decoding India's Rs 6.24 Lakh Crore Defence Budget

The country’s defence expenditure is divided in four specific demands for grants, each representing a specific kind of defence expenditure. These are civil expenditure of the ministry of defence, revenue and capital expenditure of the ministry and defence pension bill. Writes Krishnanand.

There is one segment of the Union budget where no government is willing to compromise. It is the allocation made for national security, in other words, the country’s defence budget which has been estimated at over Rs 6.24 lakh crore as per the interim budget presented by the Finance Minister Nirmala Sitharaman ahead of the national elections.

On several occasions, Sitharaman, who had previously held the defence portfolio during Prime Minister Narendra Modi’s first term, has assured the Parliament that there will be no dearth of the funds for the armed forces as national security is of paramount importance for the government.

India’s defence spending for the current financial year is estimated to be 1.9 percent of the GDP at the current prices for the year, which has been estimated at over Rs 327 lakh crores. However, as a percentage of the Union Government’s total expenditure, it works out to be 13 percent of the total union budget for the year, which has been estimated at over Rs 47.65 lakh crores.

These are broad numbers but if one breaks down the major categories of this huge amount of Rs 6.24 lakh crores then it shows that the country’s defence expenditure is divided in four specific demands for grants, each representing a specific kind of defence expenditure.

These are civil expenditure of the ministry of defence, revenue and capital expenditure of the ministry and defence pension bill. Civil expenditure of the ministry includes secretariat services, housing, budget for roads and bridges, budget for north-eastern areas, grants-in-aid to states among other things. The government proposes to spend Rs 52,000 crores on this account.

The biggest component of the defence budget goes into revenue expenditure which means payment of salary and wages, other operational expenses which do not result in creation of any assets for the military. This demand is called defence services (revenue) and entails an expenditure of 2.9 lakh crore for the current financial year, which is 47 percent of the total budget of Rs 6.24 lakh crore.

The Indian Army has the lion's share in it with a budget allocation of over Rs 1.97 lakh crore, followed by Indian Air Force (Rs 47,523 crore), and Indian Navy (Rs 33,528 crore).

One fourth of defence budget for capital expenditure

The Defence Ministry’s third demand for grant pertains to capital expenditure, the money the ministry is going to spend on procurement of weapon systems or on building defence infrastructure.

The budget data shows that the government is going to spend roughly Rs 1.72 lakh crores in the current financial year on this head. The actual capital expenditure of the defence ministry was around Rs 1.43 lakh crores in FY 2022-23, and for the last financial year (FY 2023-24), as per the revised estimates, it has been estimated at over Rs 157 lakh crore, a growth of just Rs 14,000 crores or 10 per cent growth.

This year, the finance minister has allocated Rs 1.72 lakh crores, an increase of Rs 15,000 crore or ten percent increase over the last year. The fourth demand pertains to defence pensions. India’s annual defence pension bill hovers at around Rs 1.5 lakh crores per year, which is slightly lower than the total outlay for procurement of new weapon system and creation of other defence expenditure. If one looks at defence capital expenditure, then the country spends just 27 percent of the total defence budget on buying new weapons and other capital expenditure.

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