The Union Budget presented by Finance Minister Nirmala Sitharaman in Parliament on Wednesday allocated Rs 5.94 lakh crore for the Defense Ministry, a 13% increase over last year’s budget estimates.
The non-salary revenue outlay in the Budget Estimates for 2023-24 has increased by 44% to ₹90,000 crore from ₹62,431 crore last year. The increase is especially significant given the massive increase in operational commitments since the 2020 standoff with China, with major force accretion and sustenance along the Line of Actual Control (LAC), and stockpiling of spares and ammunition .
“It will cover the sustenance of weapons systems and platforms, including ships and aircraft, and their logistics; enhancing the serviceability of the fleet; emergency procurement of critical ammunition and spares; Procurement and hiring of niche capabilities to bridge capability gaps, wherever necessary; progress stocking of military stores; and further strengthening of security among others,” the Defense Ministry said.
The ministry said that as a precursor to the hike in the non-salary revenue segment, the government during the mid-term review had increased the operational allocation for the current financial year by Rs 26,000 crore, which is 42% of the current allocation. This unprecedented increase in Revised Estimates 2022-23 has ensured liquidation of entire carry-over liabilities during the current year, thereby ensuring that there is no dent in the next year’s operating outlay of the Services.
“The enhanced allocation in the budget will also provide training aids and simulators for fire fighters and ensure that they attain the prescribed standards of training to join the defense forces,” the ministry said.
Capital expenditure for military modernization also saw an annual increase of 6.7% to ₹1.62 lakh crore from ₹10,230 crore. There was also a big increase in the allotment of defense pension due to the revision of the One Rank One Pension (OROP) scheme. The allocation for the Defense Research and Development Organization is ₹23,264 crore, a 9% year-on-year increase.
The overall revised estimate for defense for 2022-23 was Rs 5.85 lakh crore and this year’s allocation shows an increase of 1.5%. In this year’s defense budget, ₹2.7 lakh crore is for revenue expenditure, ₹1.38 lakh crore for pension and ₹22,612 crore for defense (civil).
More funds for BRO
The capital budget of the Border Roads Organization (BRO) has been increased by 43% from Rs 3,500 crore to Rs 5,000 crore in 2022-23. Defense Minister Rajnath Singh said, “The Ministry of Defense is committed to strengthen the infrastructure in the border areas, especially the northern borders.” BRO is close to completing some major infrastructure projects in the eastern sector and improving all-weather connectivity along the LAC.
Out of ₹1.62 lakh crore earmarked for capital expenditure, an increase of 6.7% year-on-year, ₹37,242 crore earmarked for the Army, ₹52,804 crore for the Navy and ₹57,137 crore for the Indian Air Force (IAF) Are. , This represents a year-on-year growth of 16.32% for the Army, 10.96% for the Navy and 2.79% for the IAF. Budget documents show that the Defense Ministry has returned around Rs 2,370 crore from the capital component, a major part of which is with the Indian Air Force, leaving an unspent amount of Rs 1,837 crore.
According to Gaurav Mehndiratta, partner and head, aerospace and defence, KPMG in India, capex for defense has increased by a modest 7% compared to a 33% increase in the country’s overall capital expenditure commitment. “We believe the capex allocation misses a commensurate reflection of the government’s momentum on defense manufacturing,” he added.
new beneficiaries
The revised estimate for pensions for 2022-23 increased by Rs 33,719 crore to Rs 1,53,415 crore following the Union Cabinet’s approval for the revision of the OROP scheme last December, which was pending since July 2019. The amendment will benefit over 25.13. lakh ex-servicemen and family pensioners including more than 4.52 lakh new beneficiaries.
The government has said that the arrears will be paid in four half-yearly instalments, except for certain categories of beneficiaries who will be paid in one instalment. The estimated annual expenditure for implementation of the revised scheme has been worked out to be around ₹8,450 crore, which includes 31% Dearness Relief (DR). The government said that the dues from July 1, 2019 to June 30, 2022, as per the applicable DR, have been calculated to be around Rs 23,638 crore, which is more than the ongoing expenditure on account of OROP.
Agniveer Corpus Fund
In line with the provisions of the Agneepath scheme for recruitment in the armed forces, the budget has announced the creation of a non-lapsable dedicated Agniveer Corpus Fund. This will complete the service fund severance package given to Agniveers on completion of four years. Individuals will have to contribute 30% of their monthly income to the fund during service, which will be matched equally by the government. The government will also pay interest as may be approved from time to time on contributions to the account to the subscriber and the entire payment will be tax-free.