Defence Budget 2024: FM Nirmala Sitharaman Keeps Rs 6.21 Lakh Crore Allocation

By siliconindia  |  Wednesday, 24 July 2024, 10:20:39 AM IST

Defence Budget 2024: FM Nirmala Sitharaman Keeps Rs 6.21 Lakh Crore Allocation
While presenting her seventh Union Budget, Union Finance Minister Nirmala Sitharaman proposed the exact amount of Rs 6.21 lakh crore as allocated five months ago in the Interim Budget towards the defence sector for FY 2024-25. This move underlines the continuous commitment of the government to strengthening national security and increasing the country's defence capabilities.
Highest Ever Allocation to Defence
Defense Minister Rajnath Singh thanked the huge allocation and said it was the highest ever budget accorded to the Ministry of Defence. "I thank the Finance Minister for allocating Rs 6,21,940.85 crore, which accounts for 12.9% of the total central budget for FY 2024-25", Singh said.
The Budget provided Rs 1.72 lakh crore for capital outlays, aimed at modernizing the Armed Forces. Mr Singh said this capital outlay would "substantially enhance military capabilities," while also mentioning that of this, Rs 1,05,518.43 crore was related to domestic procurement and furthering the Atmanirbharta initiative.
Improvements in Border Infrastructure
Quite significantly, the Border Roads Organisation has been given a 30% increase to Rs 6,500 crore. "This 30% rise in allocation from the previous budget will give greater momentum in our border infrastructure", Singh said.
Veterans' Welfare
It has also increased the outlay for the Ex-Servicemen Contributory Health Scheme, which has been pegged at Rs 6,968 crore for FY 2024-25, up 28 percent over the previous year. This comes after a massive 70 percent hike at the revised estimate stage in FY 2023-24.
Support for Defence Innovation
Budgeting Rs 518 crore for the Innovations for Defence Excellence (iDEX) scheme, which aims to develop defence technologies in the country by startups, MSMEs, and innovators. "The share will help galvanize the startup ecosystem in the Defence Sector", said Singh.
Revised Defence Allocation
Revised in February, the defence budget for FY24 had been pegged at Rs 6.24 lakh crore from Rs 5.94 lakh crore. The interim allocation of Rs 5.93 lakh crore made on Friday for FY25 is slightly lower, but it is nonetheless the highest for any ministry, accounting for almost 13 percent of the total Central budget. The figure is still below 2 percent of India's GDP. The capital expenditure for new equipment and technology has been pegged at Rs 1.72 lakh crore, which is 27.67 percent of the overall defense budget.
Detailed Breakup of Budget
Of this, Rs 1.72 lakh crore has been earmarked for capital acquisitions, which is almost 28 percent of the defence budget. Revenue expenditure of the armed forces, excluding salaries and allowances, has been pegged at Rs 92,088 crore. The defence pension bill has been accounted for by allocating Rs 1.41 lakh crore, which is an increase of 18.4 per cent over last year. The Indian Coast Guard was given Rs 7,651.80 crore and the DRDO Rs 23,855 crore.
Record in Defence Production
India's defense production touched a record Rs 1.27 lakh crore for 2023-24, up from Rs 1.09 lakh crore in the previous year. Domestic production of over 12,300 items has been made necessary with the efforts of the Ministry of Defence towards 'indigenisation' in the past three years. This initiative categorically establishes a domestic defence industry.
Future Procurement and Export Goals
The Indian armed forces are likely to spend around $130 billion on capital procurement in the next five to six years. The government wants to reduce dependence on imports and hence push domestic manufacturing. The Ministry of Defence has set a target of $25 billion in turnover in defence manufacturing in the next five years and aims to take military hardware exports up from Rs 21,083 crore to Rs 50,000 crore by 2028-29.
Economic Growth and Employment
The Finance Minister Sitharaman, in her budget speech, reiterated that the government was undertaking this allocation on the back of economic growth and employment generation. A fat Rs 2 trillion ($24 billion) was set aside for creating jobs over the next five years. She said, "India's economic growth remains robust and will continue to be a beacon of stability with low and stable inflation moving towards the 4% target".

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