by Col (Dr) P K Vasudeva

In her seventh Union Budget presentation, Finance Minister Nirmala Sitharaman announced an allocation of ₹6.21 lakh crore for the defence sector for FY25 with a focus on capital outlay, domestic procurement and border infrastructure. With a maintained allocation from the interim budget, the allocation remains the highest among ministries and constitutes nearly 13.2 per cent of the government's total expenditure. Going by this Budget’s estimate of government spending of ₹48.2 trillion, the government has allocated a significantly lower percentage to defence — 12.9 per cent. “The capital outlay of ₹1.72 trillion will further strengthen the capabilities of the armed forces. The earmarking of ₹1.05 trillion for domestic capital procurement will provide further impetus to Atmanirbharta,” said Minister of Defence Rajnath Singh.

The defence allocation for 2024-25 is almost the same amount that it allocated in the Interim Budget presented in February. As against ₹6,21,541 crore set aside for defence spending in February, Finance Minister Nirmala Sitharaman announced the allocation of ₹6.21 trillion for national defence — up by just ₹400 crore. Despite this substantial allocation, it is still below 2 per cent of India's GDP which requires 2.5 to 3 per cent of GDP for its modernisation and for battle-worthiness of the armed forces. Capital expenditure for acquiring new equipment and technology is set at ₹1.72 trillion, representing 27.67 per cent of the total defence budget which requires a review keeping in view the threat perception from our adversaries – China and Pakistan.

Approximately 28 per cent of the overall defence allocation, or ₹1.72 lakh crore, is dedicated to capital acquisitions. The Armed Forces' revenue expenditure (excluding salaries) is budgeted at ₹92,088 crore, with defence pensions at ₹1.41 lakh crore. Additionally, ₹7,651.80 crore is allocated for the Indian Coast Guard, and ₹23,855 crore for the Defence Research and Development Organisation (DRDO).

This allocation of ₹6,500 crore to Border Road Organisation (BRO) will further accelerate border infrastructure. A notable rise in the budget has been given to the BRO — an increase of 30 per cent over the last Budget, under the capital head. To foster innovation in the defence sector, the budget allocates ₹518 crore to the Innovations for Defence Excellence (iDEX) scheme, which supports technological solutions from start-ups, MSMEs, and innovators.

A significant feature of the Budget is the increased funding for the Agnipath scheme. The Army, which was allocated ₹23 crore in 2022-23, has been given a hike to ₹2,836 crore in the Interim Budget and another hike to ₹5,207 crore in the Budget for 2024-25. Agnipath scheme is undergoing a review by the Defence Ministry in view of the poor intake and acute shortage of manpower in the armed forces including officers cadre.

Capital allocations remain static at current levels, with the Army getting ₹33,411 crore, the Navy getting ₹51,052 crore, and the Air Force getting the largest hike of ₹58,112 crore.

The IAF needs much more funds in capital allocation as its present combat effectiveness is poor because it has a shortage of more than 114 combat aircrafts for its battle worthiness. Parliamentary standing committee on Defence informed that the IAF has only 31 fighter squadrons, against the sanctioned strength of 42 which is serious. The IAF is unhappy with the current pace of the Tejas light combat aircraft (TEJAS MK-1A) program because of the possible risks a delay in the induction of new fighter planes could pose to the air force’s combat effectiveness, and has flagged the hot-button issue to plane maker Hindustan Aeronautics Limited (HAL), calling for timely execution of the ₹48,000-crore contract for 83 jets.

Many in the air force are, however, sceptical about the TEJAS MK-1A deadlines being met, and one of the main reasons for that is the lingering delay in the supply of the F404 engines to HAL by US firm GE Aerospace. The delivery of the engines is delayed by around 8-10 months that means another 3-4 years delay. This combat deficiency needs to be covered immediately lest we cut a sorry figure later in case of war.

The infantry also needs enhanced allocation of funds because there is a shortage of night vision equipment and nights firing weapons in infantry resulting in heavy casualties in Jammu and Kashmir when the troops go on patrolling in the hazardous terrain to carry out anti-terror operations/counterinsurgency operations. The recent surge in terror attacks in the Jammu region, south of the Pir Panjal range, Doda, Reasi, Kathua and so on have sounded an alarm among security agencies. Ground observations suggest a strategic shift by Pakistan's intelligence agency, ISI, shifting its focus from Kashmir.

The PVS-14 Night Vision Monocular currently used by US armed forces is immediately needs to be procured for infantry units. Man-portable radar which is a lightweight surveillance radar system is also urgently needed for infantry to reduce casualties by fast detection of terrorists. Man-portable radars were developed to introduce radar in remote areas where vehicle support is not feasible.

India's annual defence production reached a record high of approximately ₹1.27 lakh crore for 2023-24, surpassing the previous year's ₹1.09 lakh crore. The Defence Ministry's indigenisation drive has resulted in over 12,300 items being domestically produced in the last three years, reflecting efforts to strengthen the domestic defence industry.

Estimates suggest that the Indian armed forces will spend approximately $130 billion on capital procurement over the next five to six years. The government aims to reduce reliance on imported military equipment by boosting domestic defence manufacturing. The Defence Ministry has set a target of $25 billion, or ₹1.75 lakh crore, in defence manufacturing turnover within the next five years. The MoD plans to increase military hardware exports from the current ₹21,083 crore to ₹50,000 crore by 2028-29.

The writer is an author, researcher, commentator and former ‘Senior Professor International Trade’