DEFENCE BUDGET

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Table 1: Defence Budget 2022–23 (BE) and 2023–24 (BE)

 

MoD Civil

Defence Services Revenue

Capital Outlay on Defence Services

Defence Pensions

Total Defence Budget

2022–2023 (BE)

20,100

2,33,000.54

1,52,369.61

1,19,696

5,25,166.15

2023–2024 (BE)

22,612.5

2,70,120.14

1,62,600

1,38,205

5,93,537.64

Source: Union Budget, 2023–24 and 2022–23, Ministry of Finance, Government of India.






Graph 1. Defence Budget as Percentage of CGE: 2012–22
1

Source: Based on data from Union Budget, Ministry of Finance, Government of India,

 Various Years. 


Smt Nirmala Sitharaman, the Hon’ble Finance Minister, presented her fifth successive Union Budget on 01 February 2023. By all accounts, it appears a growth-oriented budget and was hailed by eminent economists and captains of industry. No election freebies are visible in the budget in this pre-election year, which was a relief. The budgetary numbers at the macro level are summarised below.

GDP: The government has estimated a nominal GDP growth rate of 10.5% in 2023-24 (i.e. real growth plus inflation). The real GDP growth is estimated in the band of 6.1% to 6.8% with 6.5% as the base case.

Fiscal Deficit: The Fiscal Deficit is estimated to be 5.9% of GDP with the three year rolling target given as 4.5% of GDP (by 2025-26).

Expenditure: The government proposes to spend Rs 45,03,097 crore in 2023-24, which is an increase of 7.5% over the Revised Estimate (RE) of 2022-23.  Out of the total expenditure, Revenue Expenditure is estimated to be Rs 35,02,136 crore (1.2% increase) and Capital Expenditure is estimated to be Rs 10,00,961 crore (37.4% increase). Excluding loans and advances, the Capital Outlay has increased by 35% over the RE  2022-23.

Receipts: The receipts (other than borrowings) in 2023-24 are expected to be to the order of Rs 27,16,281 crore, an increase of 11.7% over RE of 2022-23.

Source : Note on Demand of Grants 2023-2024.

Defence Budget

Unlike previous budgets, the specifics of Defence Budget were conspicuous by their absence in the budget speech. There were no big-ticket announcements made. Allocations at the macro level are summarised below.

Total Allocation: Rs 5.94 lakh crore, an increase of 13% over Budget Estimate (BE) of previous year (Rs 5.25 lakh crore).

Capital Outlay: Increased by 6.7% to Rs 1.63 lakh crore. Distribution amongst the three Services is as follows:

Army:        Rs 37241 crore (increase of 14.25%)

Navy:                   Rs 52804 crore (increase of 10.64%)

Air Force:   Rs 57137 crore (increase of 6.3%)

DRDO:       Rs 23,264 crore (increase of 9%)

BRO:                   Rs 5000 Crore (increase of 35%)

iDEX & DTIS: Rs 116 Crore (increase of 93%) and Rs 45 Crore (increase of 95%).

Revenue Expenditure: An increase of 8.8% to Rs 2.7 lakh crore

Defence Pensions: Rs 1.38 lakh crore (increase of 15.5%).

MSMEs: Credit Guarantee Scheme with a corpus of Rs 9000 crore

MoD (Civil): Rs 8775 crore (Capital) and Rs 13838 crore (revenue)

Source : Note on Demand of Grants 19,20,21,22  for  2023-24

Comparison of Defence Budget with RE 2022-23

The present budget allocation of Rs 5.94 lakh crore, although 13% higher than BE 2022-23, yet it is just 1.5% higher as compared to the Revised Estimate (RE)  2022-23 of Rs 5.85 Crore (on an overall basis). This is evident from the interesting table below, which reveals that at the RE stage 2022-23, revenue budget had to be increased by more than Rs 26,000 crore, which as per the PIB release of 01.02.2023, was to ensure liquidation of the entire carry over liabilities during the current year thereby ensuring that there is no dent in the next year’s operational outlay of the Services. Clearly the major factors were the operational exigencies obtaining in Ladakh and North East as also the OROP arrears.

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