The Indian defence budget has undergone notable changes from 2020 to 2024, reflecting shifts in strategic priorities, geopolitical considerations, and economic challenges. This period has seen fluctuations in spending, with significant increases in certain areas and decreases in others, driven by various factors including modernization needs, border tensions, and the push for self-reliance in defence manufacturing.
Overview of the Defence Budget (2020-2024)
India’s defence budget has consistently grown over the past four years. In 2020, the budget was Rs 4.71 lakh crore, which increased to Rs 4.78 lakh crore in 2021, Rs 5.25 lakh crore in 2022, and Rs 5.94 lakh crore in 2023. For 2024, the projected budget is expected to surpass Rs 6 lakh crore. This steady increase emphasizes India’s commitment to strengthening its defence capabilities amid rising security challenges.
Key Areas of Increased Spending
Modernisation and Equipment Acquisition:
One of the most significant areas of increased spending has been modernization and equipment acquisition. The budget for capital outlay, which includes the purchase of new equipment and technology, saw a considerable rise. In 2022, the capital outlay was Rs 1.52 lakh crore, up from Rs 1.35 lakh crore in 2021. This trend continued in 2023 with an allocation of Rs 1.62 lakh crore. The focus has been on acquiring advanced weaponry, aircraft, naval vessels, and improving cyber capabilities.
Modernisation:
The need to modernise outdated equipment and enhance combat readiness in light of the ongoing border tensions with China and Pakistan. Additionally, the push for self-reliance in defence manufacturing under the “Make in India” initiative has driven investments in indigenous defence projects.
Pensions
Another area with increased spending is personnel costs, including salaries, pensions, and other benefits. The allocation for defence pensions increased significantly from Rs 1.33 lakh crore in 2021 to Rs 1.19 lakh crore in 2022, and further to Rs 1.20 lakh crore in 2023.
The rising costs are attributed to the implementation of the One Rank One Pension (OROP) scheme and regular salary increments. The Indian armed forces’ sizable personnel base necessitates substantial financial resources to maintain morale and operational effectiveness.
Key Areas of Decreased Spending
Defence Research and Development:
Contrary to the increasing trend in other areas, the budget for defence research and development (R&D) saw a relative stagnation. While there was a slight increase from Rs 10,484 crore in 2021 to Rs 11,375 crore in 2022, the growth rate did not match that of other budgetary components.
The emphasis on procurement of ready-to-use technology and equipment possibly overshadowed long-term investments in R&D. However, as reported previously recent policy shifts indicate a renewed focus on R&D to foster innovation and self-reliance in defence technology.
Maintenance and Infrastructure:
Spending on maintenance and infrastructure also witnessed marginal growth compared to other sectors. This includes the upkeep of existing military bases, equipment, and facilities.
The prioritization of immediate acquisition needs and modernization efforts may have led to relatively lower allocations for maintenance. According to defence experts, the long-term sustainability of defence infrastructure remains a critical concern that may require attention in future budgets.
Factors Influencing Budget Trends
Geopolitical Tensions:
The border skirmishes with China, particularly the Galwan Valley clash in 2020, significantly impacted defence spending priorities. The need to bolster border defences and enhance rapid deployment capabilities has driven increased allocations.
Economic Constraints:
The economic impact of the COVID-19 pandemic also influenced budget decisions. While defence spending remained a priority, economic constraints necessitated careful allocation across various sectors.
Policy Shifts:
The “Atmanirbhar Bharat” (Self-Reliant India) initiative has been a pivotal policy influencing defence spending. The focus on domestic manufacturing and reducing dependency on foreign suppliers has led to increased investments in indigenous defence projects.
