Union Budget FY25: Defense gets highest priority, allocated over Rs. 6 lakh crore

Virendra Pandit

New Delhi: Given what the first Chief of Defense Staff (CDS), the late General Bipin Rawat, emphasized that India must prepare for a “two-and-a-half front war” (meaning China, Pakistan, and internal challengers), the FY25 Budget has allocated over Rs. 6 lakh crore this year—the highest allocation to any ministry.

This is only 1.9 percent of the total GDP of India vis-a-vis the global norm of 2 to 5 percent. It is higher by approximately Rs. 1 lakh crore (18.43 percent) over the one in FY23 and 4.79 percent more than in FY24.

When global uncertainty continues to threaten regional peace and security, the government allocated Rs. 6,21,940.85 crore for the defense sector for FY25.

Of the total outlay, the Ministry of Defence (Civil) got Rs. 25,963.18 crores, the Defense Services (revenue) Rs. 2,82,772.67 crore, and Rs. 1,41,205.00 crore to meet defense pension expenses.

Out of this, a share of 27.66 percent goes to capital; 14.82 percent to revenue expenditure on sustenance and operational preparedness; 30.66 percent for pay and allowances; 22.70 percent to defense pensions, and 4.17 percent to civil organizations under the Ministry of Defense (MoD).

In absolute terms, budgetary allocation under the capital head to the defense forces for FY25 is Rs. 1.72 lakh crore, which is 20.33 percent higher than the actual expenditure of FY23 and 9.40 percent more than the Revised Allocation of FY24.

“The allocation is aimed to fill the critical capability gaps through big-ticket acquisitions in current and subsequent FYs. The enhanced budgetary allocation will fulfill the requirement of annual cash outgo on planned capital acquisitions aimed at equipping the Armed forces with state-of-the-art niche technology, lethal weapons, fighter aircraft, ships, submarines, platforms, unmanned aerial vehicles, drones, specialist vehicles, etc,” the Ministry informed.

While retaining the allocation to the MoD in the Interim Budget presented on February 1, the government has made an additional allocation of Rs. 400 crores on innovation in defense through the Acing Development of Innovative Technologies with iDEX (ADITI) scheme, the Ministry said in a statement after Finance Minister Nirmala Sitharaman presented the general budget in Lok Sabha on Tuesday.

In the interim budget, the outlay was pegged at Rs.6,21,540.85 crore.

The maximum hike in the allocation has gone to the Indian Army from BE of Rs.1,97,236.85 crore in FY25 which is a 5.4 percent jump from the FY24 BE of Rs.1,87,206.44 crores. However, the BE figure for FY25 was down by ( -1.7 percent) if compared with the RE of Rs 200633.20 crore for FY24.

Indian Air Force (IAF) followed with a 4.1 percent hike in its outlay which was BE of Rs. 47,523.49 crore for FY25 in comparison to Rs. 45,645.58 crore. The RE for the FY24 was Rs. 57,972.10 crore which meant that the budget outlay was slashed by -18 per cent in the current financial year for the IAF.

The BE for the Indian Navy is Rs. 33,528.73 crores for FY25, which is 1.5 percent up from BE of Rs. 33,034.20 crores for FY24 but -6.6 percent less than the RE of Rs. 35,900.53 crore for FY24.

Reacting to the general budget, Prime Minister Narendra Modi said it has many provisions for making India’s defense sector ‘aatmanirbhar’ (self-reliant).

Defence Minister Rajnath Singh said the allocation of Rs 1,05,518 crore for domestic capital procurement will provide further impetus to self-reliance in the military sector.

Singh thanked Finance Minister Nirmala Sitharaman for presenting an “excellent and outstanding” budget that had the highest allocation to the MoD. “The capital outlay of Rs. 1,72,000 crore will further strengthen the capabilities of the Armed Forces. Earmarking of Rs. 1,05,518.43 crore for domestic capital procurement will provide further impetus to self-reliance,” he said.

“I am pleased that Border Roads have been given a 30 percent increase in allocation over the last budget under the capital head. This allocation of Rs. 6,500 crore to BRO will further accelerate our border infrastructure,” he added.

To boost the startup ecosystem in defense industries, Rs. 518 crores has been allocated to the iDEX scheme to fund technological solutions given by startups, MSMEs, and innovators, Singh said.

The MoD also stated that continued higher allocation for operational readiness boosts the morale of the armed forces with the sole motive of keeping them battle-ready at all times. The Government has allocated Rs 92,088 crores during the current FY under this head, which is 48 percent higher than the budgetary allocation of FY23.

“This is aimed to provide the best maintenance facilities and support system to all platforms including aircraft and ships. It will facilitate procurement of ammunition; mobility of resources and personnel as demanded by the security situation, and strengthen the deployment in forward areas for any unforeseen situation,” the Ministry added.