During Wednesday’s budget announcement, Indian Finance Minister Nirmala Sitharaman announced 594,000 crore rupees ($72.6 billion) as the defence budget for 2023-2024, which is a 13% hike from the last period’s initial estimates.
The defence budget accounts for 13.18% of the government’s total budget of 4,503,097 crore rupees ($550 billion).
“Unprecedented Jump”
During her address on Wednesday, Sitharaman said that the government has announced 90,000 crore rupees ($11 billion) as operational allocation or non-salary revenue to help the armed forces “meet any eventuality.” She highlighted that the announcement represented a 44% jump compared to the budget estimates for 2022-2023.
This allocation aims to enhance combat capabilities by providing the armed forces with necessary equipment and ensuring the sustenance of weapons and assets. The non-salary revenue will also improve fleet serviceability, facilitate emergency procurement of essential ammunition and spares, and mitigate capability gaps.
Union Minister of Finance and Corporate Affairs Smt Nirmala Sitharaman, MoS Dr Bhagwat Kishanrao Karad, MoS Shri Pankaj Chaudhary and senior officials of the Ministry of Finance called on President Droupadi Murmu at Rashtrapati Bhavan before presenting the Union Budget 2023-24. pic.twitter.com/Nun9hhaVyi
— President of India (@rashtrapatibhvn) February 1, 2023
In addition to the non-salary revenue, Sitharaman announced 277,000 crore rupees ($33.8 billion) for military salaries and benefits. An additional amount of 138,000 crore rupees ($16.8 billion) was set aside for pensions and other miscellaneous expenditures.
Training Aids for “Agniveers”
The finance minister clarified that the operational allocation would also look into setting up training aids and simulators for its “Agniveers,” or young soldiers, aged between the age of 17 and 21, who will be brought in for four years under the Agnipath scheme.
Last June, the Indian government announced the Agnipath scheme, which aims to reduce the average age of armed force personnel and expenditure on salaries and pensions, which accounted for half of last year’s $70.6 billion defence budget.
The Union Budget for the Financial Year 2023-24 envisages a total outlay of Rs. 45,03,097 Crore. Of this, Ministry of Defence has been allocated a total Budget of Rs 5,93,537.64 Crore, which is 13.18 % of the total GoI Budget.
— Rajnath Singh (@rajnathsingh) February 1, 2023
Beyond the four years of the Agnipath programme, 25% of recruits will be inducted into the regular cadre for 15 years. The remaining 75% will exit the forces and receive a $21,920 package. Then, they will be “infused into civil society, where they can contribute immensely towards the nation building process.” However, unlike other retired armed forces personnel, they will not receive any pension or gratuity.
Modernisation and Infrastructure Development
The 2023-2024 defence budget also saw a 6.7% increase in capital allocations for modernisation and infrastructural development of defence services, bringing the allocated funds to 162,000 crore rupees ($19.7 billion).
The finance minister also stressed the importance of enhancing research and development, which will improve the armed forces’ capacity and further the Aatmanirbhar Bharat or “self-reliant India” mission. In this regard, the budget for research and development also saw a 9% spike.
MoD is committed towards infrastructure strengthening in the Border Areas, particularly the Northern Borders. Accordingly, the Capital Budget of Border Roads Organization (BRO) has increased by 43% to Rs 5,000 crore in FY 2023-24 as against Rs 3,500 crore in FY 2022-23.
— Rajnath Singh (@rajnathsingh) February 1, 2023
In particular, the Ministry of Defence highlighted its commitment to utilise these funds to strengthen the defence line in the northern borders and enhance infrastructure and connectivity around the border.
To this end, Sitharaman declared that the Border Roads Organisation’s Capital Budget had spiked by 43% to 5,000 crore rupees ($610 million) in 2023-2024. These funds will be used for “creating strategic assets” to improve border connectivity through projects like the Sela Tunnel, Nechipu Tunnel, and Sela Chhabrela Tunnel.
Border Tensions
Over the past few years, border tensions with China and Pakistan have pushed Indian PM Narendra Modi to expend an increasing amount to modernise his country’s defence services and enhance domestic production in the defence industry.
India Budget 2023 @WIONews pic.twitter.com/dCAHvUhIHj
— Sidhant Sibal (@sidhant) February 1, 2023
However, defence experts cited by Reuters said that the defence budget is “reasonable but not sufficient” for the extent of modernisation and infrastructure development India requires to counter its border threats.
After Wednesday’s announcement, India’s defence budget accounts for 2% of its GDP. Nevertheless, at $72.6 billion, military spending is significantly lower than China’s allocation of $230 billion in 2022.