Defence Budget 2024-25: Modest hike on paper, dip in real terms from last year

Team India Sentinels Thursday 1st of February 2024 11:55 PM

Indian Army tanks during a Republic Day parade in New Delhi. (File photo for representation.)

New Delhi: The Union Budget 2024-25, presented by the finance minister, Nirmala Sitharaman, has allocated a record ₹6.21 lakh crore (approximately $77.93 billion) for defence. This marks a 4.3 per cent increase from the previous year and signifies the largest financial commitment to national security in India’s history. However, given inflation, current currency exchange rates, and actual purchasing power of the allocation, this year’s defence budget is slightly lower than that of 2023-24. 

A comparison between last year’s defence budget and this year’s allocation shows that in real terms, it has shrunk by 0.38 per cent. This year’s defence budget is 1.91 per cent of India’s gross domestic product (GDP), which was 2.08 per cent in 2023-24.

While the previous fiscal’s (2023-24) defence allocation was ₹5.94 lakh crore, this year’s (2024-25) allocation is ₹6.21 lakh crore. The difference is ₹27,000 crore, which is an increase of a modest 4.3 per cent over the last fiscal.

Capital expenditure

In the interim budget, ₹1.72 lakh crore (27.67 per cent of the total budget) has been allocated for capital expenditure. This is the highest ever capital allocation for India’s defence sector, emphasizing modernization and acquisition of critical military equipment.

It is aimed at bridging capability gaps and supporting big-ticket purchases like fighter jets, submarines, missiles, and drones.

The focus for the capital expenditure is on:
* Modernizing armed forces with state-of-the-art technology.
* Supporting domestic arms production through initiatives, like “Make in India”.
* Acquiring advanced weapon systems and platforms.

Non-capital Expenditure:

This year’s defence budget allocates ₹4.49 lakh crore (72.33 per cent of total budget). It covers various operational expenses and other non-acquisition costs.

Here is a breakdown:
* ₹1.41 lakh crore (22.72 per cent): Defence pensions.
* ₹1.15 lakh crore (18.52 per cent): Pay and allowances for armed forces personnel.
* ₹92,088 crore (14.82 per cent): Revenue expenditure for operational preparedness, including fuel, ammunition, maintenance, training, and other running costs.
* ₹6,500 crore (1.04 per cent): Strengthening border infrastructure.
* ₹7,651.80 crore (1.23 per cent): Indian Coast Guard operations and modernization.
* ₹23,855 crore (3.84 per cent): Defence Research and Development Organization (DRDO) activities.

It may be noted that since India’s general election is going to be held in a couple of months, this is an interim budget. This may change after the new government takes charge.


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