The budget has allocated Rs. 1.72 lakh crore for capital acquisition by the Ministry of Defence, the biggest chunk of which will go to the domestic industry
The budget has allocated Rs. 1.72 lakh crore for capital acquisition by the Ministry of Defence, the biggest chunk of which will go to the domestic industry. It represents a substantial 20.33% increase from FY 2022-23’s actual expenditure and a 9.40% rise from the Revised Allocation of FY 2023-24. In all, it has set aside Rs. 6.22 lakh crore for the ministry, a tad higher than the allocation made in the interim budget five months ago. This increased budget will address critical capability gaps through significant acquisitions in the current and subsequent fiscal years. The enhanced budgetary allocation will meet the annual cash outgo requirement for planned capital acquisitions, aimed at providing the Armed Forces with advanced niche technology, lethal weapons, fighter aircraft, ships, submarines, platforms, unmanned aerial vehicles, drones, specialist vehicles, and more.
Rs 1.05 lakh crore Reserved for Indian firms
In the current Financial Year (FY), the Ministry of Defence (MoD) has allocated 75% of the modernisation budget, totalling Rs 1,05,518.43 crore, for procurement from domestic industries. According to the Ministry, this allocation is expected to positively impact the GDP, generate employment, and contribute to capital formation, providing a boost to the economy.
The planned modernisation of the Su-30 MKI fighter fleet, along with additional aircraft procurement, acquisition of engines for the existing MiG-29 fleet, and purchase of transport aircraft C-295 and LCA Mk1A fighter, will be funded out of the budget.
Major deals expected to be signed this year include a contract to acquire three additional submarines from Mazagaon Dockyards Ltd and a purchase of 26 Rafale Marines from France and long-range drones from the US.
In a post on X, Rajnath Singh said, “As far as the allocation to the Ministry of Defence is concerned, I thank the finance minister for giving the highest allocation to the tune of Rs. 6,21,940.85 crore. The capital outlay of Rs. 1,72,000 crore will further strengthen the capabilities of armed forces.”
“This will have a multiplier effect on GDP, employment generation and capital formation, thus providing a stimulus to the economy,” the MoD statement said.
Allocations for flagship schemes have also been hiked significantly. For the Agnipath scheme, the allocation has been hiked to Rs. 5,979 crore from the budgeted estimate of Rs. 4,266 crore in the last financial year. The government also has allocated an additional Rs 400 crore for innovation in defence through the Acing Development of Innovative Technologies with iDEX (ADITI) scheme while maintaining the allocation made to the Ministry of Defence during the interim budget. The ADITI scheme aims to engage with startups, MSMEs, and innovators to develop technological solutions for the Indian military. Under this scheme, a grant of up to 50% of the Product Development Budget will be awarded, with an enhanced limit of Rs 25 crore per applicant, in line with the existing iDEX guidelines.
“To boost the startup ecosystem in Defence Industries, Rs 518 crore has been allocated to iDEX scheme to fund technological solutions given by startups, MSMEs and innovators,” Singh said.
Bolstering Border Infrastructure for Strategic Requirements
The government is dedicated to improving border infrastructure by increasing funding for agencies involved in important projects and providing essential connections in border areas. In the 2024-25 budget, the Border Roads Organizations (BRO) will receive Rs 6,500 crore for capital, a 30% increase from the previous fiscal year and a 160% increase from two years ago. This significant increase in funding will accelerate the pace of infrastructure development in border areas.
This increased financial provision will support infrastructure development in border areas and boost socio-economic development in the region. The government has allocated funds for projects like developing Nyoma Airfield, building a bridge in the Andaman and Nicobar Islands, and constructing tunnels in Himachal Pradesh and Arunachal Pradesh to drive progress and prosperity.
Ravi Shankar
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