All About Defence Budget 2021-22

Union Budget for the Financial Year 2021-22, presented by the Finance Minister Smt Nirmala Sitharaman in the Parliament on February 01, 2021 has given historic push to defence modernisation by increasing defence capital outlay by 18.75 per cent. 

Capital outlay increased by nearly 19 per cent giving defence modernisation historic push; Raksha Mantri thanks Prime Minister & Finance Minister for increasing defence budget to 4.78 lakh crore

Defence allocation in the budget has been increased to Rs 4,78,195.62 crore for the Financial Year 2021-22. Excluding Defence Pension, the total allocations for Defence Services and other organisations/Departments under Ministry of Defence for the FY 2021-22 is Rs 3,62,345.62 crore which is an increase of Rs 24,792.62 crore over the Current FY 2020-21. 

The allocation under capital expenditure which relates to modernisation and infrastructure development of Armed Forces has been significantly increased.  The allocation under Capital of Rs 1,35,060.72 crore for FY 2021-22 represents an increase of 18.75 per cent over FY 2020-21 and 30.62 per cent over FY 2019-20. This is the highest ever increase in capital outlay of Defence in the last 15 years. 

Capital Outlay on Defence Services (Rs in Crore)
YearCapital BEIncrease%age increase
2019-201,03,394.319,412.1810.01
2020-211,13,734.0010,339.6910.00
2021-221,35,060.7221,326.7218.75

Allocation under Non-Salary Revenue to meet operational requirement has been increased to Rs 54,624.67 crore.  This is 6 per cent growth over FY 2020-21. 

The Capital allocation for DRDO has been increased to Rs 11,375.50 crore. This is an increase of 8 per cent over 2020-21 and 8.5 per cent over 2019-20. The allocation for Border Roads Organisation (BRO) has been increased to Rs 6004.08 crore which is 7.48 per cent increase over FY 2021-22 and 14.49 per cent over FY 2019-20. 

Raksha Mantri Shri Rajnath Singh has thanked Prime Minister Shri Narendra Modi and Finance Minister Smt Nirmala Sitharaman for increasing the defence budget to 4.78 lakh crore for the Financial Year 2021-22 (FY21-22), which includes capital expenditure worth Rs 1.35 lakh crore. It is nearly 19 per cent increase in Defence capital expenditure. This is the highest ever increase in capital outlay for defence in the last 15 years. 

Raksha Mantri said special attention has been paid to economic reforms, employment generation, capital formation and creating infrastructure in India. “Based on 6 pillars of good governance this Budget will usher India into a new era of inclusive growth and prosperity,” he said. 

Shri Rajnath Singh in a series of tweets said, “Several new policies & programmes to support India’s farmers, agriculture, infrastructure and reinvigoration of Human Resource have also been announced. I am glad that the Budget has proposed the opening of 100 new Sainik Schools in the country.” These schools will be set up in partnership with States, Non-Governmental Organisations (NGOs) and private institutions.

In the middle of a conflict with China, defence forces received an overall hike of around 7.4 per cent over last year as Rs 3.62 lakh crore were provided to them excluding pensions over Rs 3.37 lakh crores last year.

The defence forces received more than 18 per cent hike over last year in capital outlay meant for acquisition of new weapon systems as Rs 1.35 lakh crore have been provided over the Rs 1.13 lakh crores last year.
However, the budget documents also revealed that the Defence Ministry spent an extra amount of Rs 20,776 crore for buying new weapon systems and spares for the armed forces in the present fiscal over and above the funds allocated for the purpose.

The additional Rs 20,776 crore has been spent on buying weapons and other spares under the special financial powers given to services under emergency and other provisions.

The money has been used to acquire equipment like the Spice-2000 bombs, Spike anti-tank guided missiles, SiG Sauer assault rifles, Excalibur ammunition, multiple types of aircraft spares from Russia along with the ammunition for tanks and fighter jets.

In the 2021-22 Union Budget, the Defence Ministry has been allocated Rs 4,78,195.62 crore.
Rs 1.15 lakh crore have also been allocated for defence pensions which are disbursed to both military and civilians who have worked for defence Ministry. Last year, the government had allocated Rs 1.33 lakh crore for the defence pensions.

The savings of around Rs 18,000 crore can be seen in terms of defence pensions as the government now seems to be determined with the proposals of enhancing retirement age for defence personnel.

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