Budget frontlines: 'Agnipath' driving shift in spending patterns

Finance Minister Nirmala Sitharaman, a former defence minister until five years ago, allocated to the Ministry of Defence (MoD) on Tuesday, earmarking a Budget of Rs 6.21 lakh crore – almost the same amount in her Interim Budget, presented before the General Elections this year.

The government says that going by the baseline of the Budget for FY24, the current allocation amounts to a 4.72 per cent rise over the previous year’s allocation.

As a percentage of government expenditure, Sitharaman has allocated just 13 per cent to defence, continuing a multi-year trend of falling allocations. As a percentage of the gross domestic product (GDP), the defence allocations, which dipped below the 2 per cent mark last year remained below that level.

ALSO READ PART I: Budget Frontlines: A long shot from the 2% goalpost for defence funds

Despite the government’s ‘Agnipath’ initiative, the government continues to grapple with the challenge of getting low-cost personnel in sufficient numbers to man the vast northern mountainous borders with China and Pakistan.

The cost of soldiers’ pay and allowances is compounded by the outgo on pensions to which the soldier remains entitled for his entire life. After the soldier’s death, his dependent spouse or daughter continues to receive pensions at half the rate.

As a consequence, the outgo on pay and allowances adds up to 32.5 per cent of the Budget. In addition, pensions account for another 22.5 per cent, hiking the overall cost of personnel to 55 per cent.

The expenditure on sustenance, which is what keeps the military, its weaponry, equipment and ammunition going, adds up this year to another 15.5 per cent. This leaves less than 30 per cent of the Defence Budget for modernisation – or capital expenditure, as it is called.

Most modern militaries spend above 50 per cent of their Defence Budget on the capital account, to ensure they go into combat with superior weaponry and equipment.

In contrast, India’s military – especially the Army – continues with a personnel-heavy structure that sucks up more than half the defence allocations into payment of salaries and pensions.

ALSO READ PART III: Budget Frontlines: Over a million-strong CAPF, the Centre's invisible army

At the national level, there is inadequate expenditure on the defence capital account. The finance minister’s promise to boost the government’s capital expenditure to at least Rs 11,11,111 crore makes DRDO’s R&D spend of Rs 13,208 crore appear inadequate. 

The government’s commitment to the Agnipath project is now only beginning to drive a shift in the spending patterns for recruitment.

From an inadequate Rs 160 crore allocated to the Army for 2022-23, spending under that head has risen in 2023-24 to Rs 2,836 crore, while the government has allocated Rs 5,207 crore for 2024-25.