Finance Minister Nirmala Sitharaman on Wednesday increased allocation to defence Budget to Rs 5.94 lakh crore for 2023-24 from last year's (2022-23) allocation of Rs 5.25 lakh crore.

A total of Rs 1.62 lakh crore has been set aside for capital expenditure that includes purchasing new weapons, aircraft, warships and other military hardware, stated the Budget report.

For 2022-23, the budgetary allocation for capital outlay was Rs 1.52 lakh crore but the revised estimate showed the expenditure at Rs 1.50 lakh crore.

According to 2023-24 budget documents, an allocation of Rs 2,70,120 crore has been made for revenue expenditure that includes expenses on payment of salaries and maintenance of establishments.

The budgetary allocation of revenue expenditure in 2022-23 was Rs 2,39,000 crore.

"The allocation under this segment has doubled in two years since FY 2021-22. This will boost the Border infrastructure thereby creating strategically important assets like Sela Tunnel, Nechipu Tunnel & Sela-Chhabrela Tunnel & will also enhance border connectivity," said defence ministry.

In the budget for 2023-24, the capital outlay for the Ministry of Defence (Civil) has been pegged at Rs 8,774 crore while an amount of Rs 13,837 crore has been set aside under capital outlay.A separate amount of Rs 1,38,205 crore has been allocated for defence pensions. The total revenue expenditure including the pension outlay has been estimated at Rs 4,22,162 crore. According to the budget papers, the total size of the defence budget is Rs 5,93,537.64 crore.

Capital expenditure in the defence sector is crucial for India’s aim to become self-reliant in defence manufacturing and to meet a rising challenge from China and Pakistan by creating infrastructure and adopting modern technology.

The government, in the last few years, has encouraged domestic manufacturing while reducing exports under the defence ecosystem of India. The exports in the sector surged nearly eight times to Rs 12,815 crore in 2021-22 from Rs 1,521 crore in 2016-17.

In September 2022, the government had introduced the PLI scheme in order to spur manufacturing of drones and drone components in India.

The defence ministry had, in December last year, approved the procurement of arms worth over Rs 84,300 crore to boost the combat capabilities of the defence forces. This amount included approval for six capital acquisitions for the Indian Army, 10 for the Indian Navy, six for Indian Air Force, and two for Indian Coast Guard, as per media reports.