The allocation to the Ministry of Defence in the Union budget for FY 2024-25 stands at Rs 6,21,940.85 Crore, representing 12.9% of the total Government of India budget. This increase is marginal compared to last year’s budget, barely covering the rise in salaries and Dearness Allowance (DA). Such a modest increase fails to support major advancements or significant enhancements in defense research and development (R&D). The overarching goal of countering China’s influence in the Indian Ocean necessitates a substantial financial outlay and a well-structured multi-year plan. However, the current budget falls short in addressing the strategic expansion of the Navy’s footprint.
For the last decade or so there has been a 6% increase year on year of the defence budget. The graph below of yearly expenditure shows an uptrend only to show a blip in 24-25.
The capital outlay of Rs 1,72,000 Crore, intended to bolster the capabilities of the Armed Forces, is insufficient for notable advancements. Although Rs 1,05,518.43 Crore is earmarked for domestic capital procurement, boosting the indigenous industry, its effectiveness in providing a strategic edge over adversaries remains uncertain. In this respect let us compare the budget of various countries including Pakistan and analyse it:
If we see our defence expenditure we would realise that China is spending at least 3.5 times we are spending on our defence needs. Though China sees threat from US and most of its forces are aligned towards its East, these forces can always be moved from one theatre of operation to another. This makes it mandatory for us to fund our Navy and Airforce in a major way. We also need to include Amphibious Operations in our future defence planning and expenditure for that needs to be separately earmarked.
The Border Roads Organisation (BRO) has received a 30% increase in allocation, amounting to Rs 6,500 Crore, which will expedite the development of border infrastructure. This is a significant boost for defense logistics, aiding rapid mobilization towards the Chinese border, with funds mainly allocated to ongoing projects in Leh, Himachal, and Arunachal Pradesh. These projects, in various stages of completion, will enhance the Indian Army’s capability for swift deployment.
To invigorate the startup ecosystem within the defense sector, Rs 518 Crore has been allocated to the Innovations for Defence Excellence (iDEX) scheme, which supports technological solutions from startups, MSMEs, and innovators. However, there has been no progress on the disinvestment of defense companies like Mazagon Dock Shipbuilders and Cochin Shipyard, which could have allowed private sector investment to accelerate the mass production of naval ships. This lack of clarity on the disinvestment process may hinder the supply of modern ships and aircraft.
Modernisation of forces would require a substantial amount of capital outlay in the future. If we see the shortfall in the budget allocated for modernisation it’s staggering:
One may also like to see the shortfall in the alloted budget over the years versus allocation of funds:
Future modernization of the forces will require substantial capital investment. Despite the growing Chinese presence and the ongoing discourse on modernizing the Indian Armed Forces and infrastructure, the defense budget for the upcoming fiscal year has seen only a nominal increase, primarily covering personnel pay and allowances. The budget lacks provisions for strengthening the office of the Chief of Defence Staff (CDS), advancing the theaterisation of forces, or raising an additional mountain strike corps. Furthermore, there is no specific focus on funding the development of amphibious forces.
While the budget does maintain momentum in infrastructure development and fosters self-reliance in technical equipment necessary for deterrence, it falls short in addressing several critical areas. Comprehensive modernization and strategic capability enhancement require more substantial financial commitments to counteract the evolving security landscape effectively.
