Defence budget 2023

Category
Economy
Published
3rd Feb, 2023

Context

The Union Budget presented in Parliament by Finance Minister allocated Rs.5.94 lakh crore for the Defence Ministry, a 13% increase year-on-year from last year’s budget estimates.

Summary:

Defence Budget Estimates (2023-24)

Total allocation: Rs.5.93 lakh crore
Revenue allocation: Rs.2.7 lakh crore
Capital expenditure: Rs.1.62 lakh crore
Pension: Rs.1.38 lakh crore
Civil: Rs.22,612 crore

Highlights for Defence sector:

The non-salary revenue outlay has gone up by 44% from Rs.62,431 crore the previous year to Rs.90,000 crore in the Budget Estimates of 2023-24.
The fund allocated to the sector is for following purpose:
- This will cater to sustenance of weapon systems and platforms, including ships and aircraft, and their logistics;
- boost fleet serviceability; emergency procurement of critical ammunition and spares;
- procuring and hiring of niche capabilities to mitigate capability gaps wherever required;
- progress stocking of military reserves; and
- Strengthening forward defences.
Capex for defence: It received a nominal 7% increase compared with the 33% rise in the country’s overall capital expenditure commitment.
- Capital expenditure for military modernisation also saw a 6.7% rise by Rs.10,230 crore year-on-year to Rs.1.62 lakh crore.
For Agniveers:
- The enhanced allocations will also cater to training aids and simulators for Agniveers and ensure that they achieve the set standards of training for induction in the defence forces.

Agniveer Corpus Fund:

This will cater to the Seva Nidhi severance package to be given to Agniveers on completion of four years. Individuals would have to contribute 30% of their monthly income to the fund during service, which will be equally matched by the government.
The government will also pay to the subscriber interest, as approved from time to time, on the contributions in the account and the entire pay-out will be tax-free.

For pensioners:
There was also a major hike in the allocation for defence pensions on account of the revision of the One Rank One Pension (OROP) scheme.
Allocation for the Defence Research and Development Organisation is Rs.23,264 crore, a 9% increase year-on-year.
Payment of arrears will be paid from July 1, 2019 to June 30, 2022, which have been calculated at approximately Rs.23,638 crore as per the applicable Dearness Relief (DR).

Dearness relief:

Dearness Relief means the relief due to pensioneRs.family pensioners upto average CPI 1510.

For logistics and Infrastructure:
- The capital budget of the Border Roads Organisation (BRO) has gone up by 43% to Rs.5,000 crore from Rs.3,500 crore in 2022-23.
- The estimates are committed towards infrastructure strengthening in the border areas, particularly the Northern Borders.

The BRO is close to finishing some key infrastructure projects in the eastern sector and improving all-weather connectivity along the LAC.

For different arms of Forces:
- A 6.7% increase year-on-year, Rs.37,242 crore has been earmarked for the Army, a year-on-year increase of 16.32%
- Rs.52,804 crore for the Navy, a y-o-y increase of 10.96% and
- Rs.57,137 crore for the Indian Air Force (IAF), 2.79% increase in y-o-y basis.