The report on India's defence spending reveals a notable trend: the share of the central government's expenditure allocated to defence has been steadily declining over recent years.

Current Defence Budget Overview

For the fiscal year 2024-25, the Indian government has allocated ₹6,21,941 crore (approximately USD 74.3 billion) to the Ministry of Defence. This represents a slight decrease of 0.3% compared to the revised estimates for 2023-24. Despite this nominal reduction, the overall central government expenditure is projected to increase by 9% in the same period.

Declining Share of Defence Spending

Historically, defence spending as a percentage of total government expenditure has seen a downward trajectory:

In 2014-15, defence spending accounted for 17.1% of total expenditure.

This increased to 17.8% in 2016-17.

However, by 2024-25, it is expected to drop to 12.9%, down from 13.9% in the previous fiscal year.

This decline is significant given that India remains one of the top military spenders globally, yet its defence budget's share of GDP has also decreased to 1.9%.

Factors Contributing to the Decline

Several factors are influencing this decline in defence spending share:

High Pension Costs: A substantial portion of the defence budget is allocated to pensions, which continues to rise. For instance, the pension allocation for 2024-25 is approximately ₹1,41,205 crore, reflecting a 2.17% increase from the previous year.

Increased Total Expenditure: The overall increase in central government expenditure means that even with an absolute increase in defence spending, its relative share diminishes.

Focus on Modernisation And Self-Reliance: The government is emphasizing modernization and indigenization through initiatives like "Atmanirbhar Bharat," which aims to boost domestic production and reduce reliance on imports for defence equipment.

Implications

The declining share of defence spending raises concerns about India's ability to meet its long-term security and modernization goals amidst evolving geopolitical challenges, particularly with neighbouring countries like China and Pakistan. While capital outlay for modernization has seen some increases—projected at ₹1,72,000 crore for 2024-25—this may not be sufficient given the broader context of rising costs and strategic needs.

The nominal figures for India's defence budget show slight increases or stability, the declining share relative to total government expenditure highlights potential challenges in maintaining robust military capabilities in an increasingly complex security environment.

(With Reporting by thehindubusinessline)