Rs 5.25 Lakh Crore Allocated for Defence Budget, Push for Make in India

According to reports, the Ministry of Defense had already submitted its “wish list” to the government, and the Finance Ministry was expected to include important proposals in Budget 2022. The Narendra Modi government proposed a defence budget allocation of Rs 525166.15 crore for the fiscal year 2022-23, an increase of about 10% above the spending planned in Budget 2021.

Finance Minister Nirmala Sitharaman made the announcement. This is her third full Budget as part of the Modi 2.0 administration. Significant policy changes announced for promoting self-reliance in defence sector, including 25% earmarking of R&D funds, 68% capital procurement budget for domestic industry and Rs 3,810 crore for 7 new defence PSUs.

The Indian Air Force kept the largest part of the forces’ capital budget, at Rs 56,851.55 crore, a 4.5 percent increase over the previous fiscal year. However, the Indian Army’s capital budget decreased by 12.2% to Rs 32,102 crore, down from Rs 36,481.90 crore the previous fiscal year.

The entire capital outlay for the Armed Forces was Rs 1.52 lakh crore, an increase of 12.82 percent above the capital budget of Rs 1.35 lakh crore allocated previous year. The Armed Forces’ revenue budget was Rs 2.33 lakh crore, up 9.89 percent from the previous financial year. The civil budget for the Ministry of Defence, the fourth component of the defence budget, was Rs 20,100 cr.

Sitharaman stated in her budget address that defence research and development will be available to the commercial sector, start-ups, and universities. And 25% of the defence R&D budget has been set aside for this purpose. Through a special purpose vehicle (SPV) concept, the private sector will be encouraged to take up the design and development of military platforms and equipment in conjunction with the DRDO and other organisations under this budget.

The establishment of an independent nodal umbrella authority to meet a wide range of testing and certification criteria was also announced in the budget. According to Sitharaman, the government is dedicated to lowering imports and promoting Atmanirbharta, or self-reliance in military equipment.

Despite the fact that India’s defence budget is the fifth largest in the world (after the United States, China, Saudi Arabia, and Russia), it is significantly less than China’s. Experts estimate that China’s defence spending is around 3% of GDP, but India’s defence budget is approximately 1.58 percent of GDP.

Also because Indian army is one of the largest in the world, a considerable portion of the defence budget is spent on salaries and pensions, which can be a stumbling block at times. With new purchases like Rafale jets, Prime Minister Narendra Modi has made his intentions for defence modernization and investment quite plain.