Union Budget 2024-25: No major shift in defence sector's allocation

Current defence allocation's impact on overall spending still unclear

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The new government’s defence allocation for 2024-25 is almost the same amount that it allocated in the Interim Budget presented in February.

As against Rs 6,21,541 crore that the central government had set aside for defence spending in February, Finance Minister Nirmala Sitharaman announced the allocation of Rs 6.21 trillion for national defence on Tuesday — up by just Rs 400 crore.

It remains to be seen how the current allocation fares as a percentage of government defence spending during the year.

The Interim Budget had allocated 13.2 per cent of an estimated government spending of Rs 45.03 trillion to defence.

Going by this Budget’s estimate of government spending of Rs 48.2 trillion, the government has allocated a significantly lower percentage to defence — 12.9 per cent.

Defence Minister Rajnath Singh thanked Sitharaman for giving the “highest allocation” to defence.

“The capital outlay of Rs 1.72 trillion will further strengthen the capabilities of the armed forces. The earmarking of Rs 1.05 trillion for domestic capital procurement will provide further impetus to Atmanibharta,” Rajnath said.

A notable rise in the budget has been given to the Border Roads Organisation (BRO) — an increase of 30 per cent over the last Budget, under the capital head.

“This allocation of Rs 6,500 crore to BRO will further accelerate our border infrastructure. To boost the startup ecosystem in defence industries, Rs 518 crore has been allocated to the iDEX scheme (Innovations for Defence Excellence) to fund radical technological solutions given by startups, micro, small and medium enterprises, and innovators,” he added.

A significant feature of the Budget is the increased funding for the Agniveer scheme. The Army, which was allocated Rs 23 crore in 2022-23, has been given a hike to Rs 2,836 crore in the Interim Budget and another hike to Rs 5,207 crore in the Budget for 2024-25.

Capital allocations remain static at current levels, with the Army getting Rs 33,411 crore, the Navy getting Rs 51,052 crore, and the Air Force getting the largest hike of Rs 58,112 crore.