budget 2023The Union Budget 2023 to be announced by the Government of India is expected to focus on modernization of the country’s armed forces in the light of ongoing tensions with China along the Line of Actual Control (LAC). This is likely to increase allocations for defense PSUs such as Bharat Dynamics Limited (BDL), Hindustan Aeronautics Limited (HAL) and Bharat Electronics Limited (BEL), thereby boosting their share prices nationally Can Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
Tensions between India and China along the LAC have been rising in recent years, with both countries increasing their military presence in the region. In response, the Indian government is working on modernizing its armed forces to better defend its borders and protect its sovereignty.
This has led to a greater focus on defense allocation in the Union Budget, with the government looking to allocate more funds for the development and procurement of advanced weapon systems, military equipment and other defence-related infrastructure.
Several Public Sector Undertakings (PSUs) are expected to benefit from this increased focus on defense allocations. The PSUs are involved in the production of advanced weapon systems and military equipment for the Indian Armed Forces.
Vikas Gupta, CEO and chief investment strategist at OmniScience Capital, believes that the defense budget should be increased significantly for various reasons. He cites ongoing friction along India’s border with China since 2017, and before that, especially from Bhutan in the northeast to Ladakh in the north.
Additionally, India’s border with Pakistan has always been volatile, requiring strong defenses to prevent infiltration. Furthermore, Gupta highlighted the need for monitoring and possible control of Pakistan-China highways passing through Indian territory.
The Union Budget 2023 is also expected to provide a target for the defense allocation for the next financial year. This will give a clear indication of the government’s expenditure plans for the defense sector and give investors a better understanding of the opportunities available in the sector.
questions to ask
Q1. How many wars did India win?
The Indian Army has been involved in four wars in the country’s history, three against Pakistan and one against China, in which India emerged victorious.
Q2. What is LAC?
The Line of Actual Control (LAC) refers to the theoretical boundary that divides India-administered land from China-administered land in the context of the Sino-Indian border dispute.
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