The Union Budget for Financial Year 2023-24, presented by the Finance Minister on February 01, 2023, has given further impetus to the modernization of Defence Services and Defence Security Infrastructure development, including the Border Road Infrastructure and Coastal Security Infrastructure.
Defence Budget 2023
The Armed Forces have to be battle ready to meet any eventuality. Towards that end, the Non-Salary revenue outlay has been enhanced significantly from Rs 62,431 crore in Budget Estimates (BE) 2022-23 to Rs 90,000 crore in BE 2023-24, representing a 44% jump. This expenditure is expected to close critical gaps in the combat capabilities and equip the Forces in terms of ammunition, sustenance of weapons & assets, military reserves etc. This Budget has also sustained the thrust on Modernisation and Infrastructure Development of the Defence Services, by continuing an upward trend in Capital Outlay.
The Union Budget for Financial Year 2023-24 envisages a total outlay of Rs 45,03,097 crore. Of this, the Ministry of Defence has been allocated a total Budget of Rs 5,93,537.64 crore, which is 13.18 % of the total budget. This includes an amount of Rs 1,38,205 crore for Defence Pensions. The total Defence Budget represents an enhancement of Rs 68,371.49 crore (13%) over the Budget of 2022-23.
Highlights:
Increase in the Non-Salary/operational allocations
- In keeping with the Government’s resolve and focus towards maintaining a high level of Operational Preparedness of the Defence Services to face current and future challenges, the Non-Salary Revenue/operational allocation gets a boost of Rs 27,570 Crore, with the budgetary outlay under this segment augmented from Rs 62,431 crore in BE 2022-23 to Rs 90,000 crore in BE 2023-24. This will cater to the sustenance of Weapon Systems, Platforms including Ships/Aircraft & their logistics; boost fleet serviceability; emergency procurement of critical ammunition and spares; procure/hiring of niche capabilities to mitigate capability gaps wherever required; progress stocking of military reserves, strengthening forward defences, amongst others.
- As a precursor to this increase in the Non-Salary Revenue segment, the government during the Mid-term review had also enhanced the operational allotments of the current financial year by Rs 26,000 crore, which works out to 42% of the present allocation. This unprecedented increase in the Revised Estimates 2022-23 has ensured liquidation of the entire carry-over liabilities during the current year thereby ensuring that there is no dent in the next year’s operational outlay of the Services.
- The enhanced allocations in the Budget will also cater to Training Aids & Simulators for Agniveers and ensure that they achieve the set standards of training for induction in the Defence Forces.
Thrust on Modernisation & Infrastructure Development Sustained in Union Budget 2023:
In the Union Budget 2023-24, the Capital Investment Outlay has been increased steeply for the third year in a row by 33 per cent to Rs 10 lakh crore, which would be 3.3 per cent of GDP. This will be almost three times the outlay in 2019-20.
Accordingly, the Capital Allocations pertaining to the modernisation and infrastructure development of the Defence Services has been increased to Rs 1,62,600 crore representing a rise of Rs 10,230 crore (6.7%) over FY 2022-23. Also, the increase in the Capital Budget since 2019-20 has been Rs 59,200 crore (57%). This increase is a reflection of the Government’s commitment towards sustainable augmentation in the area of modernisation & infrastructure development of the Defence Services.
MoD is committed towards infrastructure strengthening in the Border Areas, particularly the Northern Borders. Accordingly, the Capital Budget of Border Roads Organisation (BRO) has been increased by 43% to Rs 5,000 crore in FY 2023-24 as against Rs 3,500 crore in FY 2022-23. Also, the allocation under this segment has doubled in two years since FY 2021-22. This will boost the Border infrastructure thereby creating strategically important assets like Sela Tunnel, Nechipu Tunnel & Sela-Chhabrela Tunnel and will also enhance border connectivity.
Recognising the crucial role of Research, Innovation and Technological development towards capacity building of the Armed Forces as well as fueling India’s Mission of Aatmanirbharta
- Towards strengthening Research and Development in Defence, the allocation to DRDO has been enhanced by 9%, with a total allocation of Rs 23,264 crore in BE 2023-24.
- To further foster innovation, encourage technology development and strengthen the Defence Industrial ecosystem in the country, iDEX and DTIS have been allocated Rs 116 crore and Rs 45 crore respectively representing an enhancement of 93% for iDEX and 95% for DTIS over 2022-23. This will fulfill the Ministry of Defence’s vision to leverage ideas from bright young minds across the country.
- The Union Budget 2023-24 has announced a National Data Governance Policy to unleash innovation and research by start-ups and academia. This will enable access to anonymized data which will further boost the Defence Start-ups and iDEX scheme.
- The Union Budget 2023-24 has also announced that the revamped Credit Guarantee scheme for MSMEs will take effect from 1st April 2023 through the infusion of Rs. 9,000 Crore in the corpus. This will enable additional collateral-free guaranteed credit of Rs 2 lakh crore. Further, the cost of the credit has also been reduced by about 1 per cent. This scheme will give a further fillip to the MSMEs associated with the Defence Sector.
Budgetary provision to comprehensively raise the overall ease of living for our esteemed veterans
- The Defence Pension Budget registers a notable jump of 15.5 % in FY 2023-24. In absolute terms, this amount is Rs 1,38, 205 Crore in BE 2023-24 against Rs 1,19,696 crore in BE 2022-23. Further, RE 2022-23 allocations at Rs 1,53,415 crore records a significant jump of 28%, amounting to Rs 33, 718 crore. This includes an amount of Rs 28,138 Crore to meet the requirement on account of revision of Armed Forces Pensioners/ Family Pensioners under One Rank One Pension (OROP).
- Towards the Government’s commitment in transforming Healthcare outreach to our veterans, Defence Budget 2023-24 registers a notable increase of 52% in the allotment for Ex-Servicemen Contributory Health Scheme (ECHS) with BE allocation of Rs. 5431.56 Crore in FY 2023-24 against Rs. 3582.51 Crore in FY 2022-23. This enhancement will ensure ‘Cashless Health Services’ and improved ‘Service Delivery’ to our veterans and their dependents across India.
Welfare of Agniveers
- The Union Budget 2023-24 has provided Exempt-Exempt-Exempt (EEE) status to the Agniveer Fund.
Summary – Defence Budget 2023
The defence budget for 2023/24 will be increased by 12.95 per cent, from 5.25 lakh crore to 5.94 lakh crore, to allow the military to develop and/or purchase advanced weapons systems such as new fighter jets, submarines, and tanks, according to finance minister Nirmala Sitharaman, who presented the government’s budget on Wednesday. She also stated that the capital expenditure budget had been increased by approximately 10,000 crores to settle at 1.62 lakh crore.
The budget for the modernization of the armed forces was also increased, from 1.52 lakh crore to 1.62 lakh crore, with a significant portion of this going toward the acquisition of weapon systems and equipment from domestic manufacturers in line with the government’s ‘Make in India’ initiative. The increase in the modernization budget is only about 6.5 percent, which is considered a moderate increase. The revised estimates for budgetary allocation for capital outlay in 2022/23 were 1.5 lakh crore.
News organization According to budget papers, an allocation of 2.70 lakh crore has been made for revenue expenditure, which includes salaries and establishment maintenance. In 2022-23, the budgetary allocation for revenue expenditure was 2.39 lakh crore.
What equipment are the armed forces planning to buy?
In addition to investing in indigenous fighter jets, the Air Force intends to acquire new fighter aircraft as part of its plans to induct next-generation (4.5) fighter planes. The Navy is also interested in purchasing fighter jets from France, but that deal is unlikely to be completed this year because procedures have yet to be initiated.
Last year, the French-built Rafale-M beat out the US-built F/A-18 Super Hornet for 26 new deck-based fighters for INS Vikrant, the indigenously developed aircraft carrier that will partner with INS Vikramaditya.
The Air Force already has two Rafale squadrons, and if the Navy orders the maritime version, maintenance will be simplified. The Navy is also working on acquiring submarines as part of Project 75 India, but this may take some time.
Meanwhile, the Army will begin the process of acquiring light tanks and artillery guns for operational needs in Ladakh.
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