Union Budget for the financial year 2023-24 was tabled on February 1 by Finance Minister Nirmala Sitharaman. This budget comes at a time when global economy stares at recession or a very dismal growth. World is still recovering from the aftermath of covid pandemic. India on the other hand has announced a full recovery from the covid shock and is pitched at a growth curve of 7 percent. All this despite negative global economic conditions prevailing.
War in Ukraine has furthered disrupted supply and growth the world over. Rise of China and growing competition with US in the Indo-Pacific region has thrown new challenges to the existing world order. India finds itself in the middle of this geopolitical turmoil offering itself as a pivot of stability and hope to the rule based world order. In this competitive environment of geo-economics, the rise of economy is complemented by strong military capabilities.
India still holds up to 70% of Russian origin equipment. Post sanctions the spares and maintenance has become a real nightmare. Disruption in supply chain and sanctions on Russia have put Indian defence planners into a serious dilemma.
The deteriorating regional security situation in our neighbourhood and our borders make a urgent case for urgent self-reliance or the Atmnirbharta.
By some estimates, the Indian defence industry was looking at an substantial increase in capital out lay. The defence experts were of the view that a budget allocation of 6.5 lakh crores would have been ideal in given circumstances.
Keeping in mind the geopolitical and regional challenges, the government has prioritised defence spending. The Narendra Modi government has increased the defence budget to Rs 5.96 lakh crore for 2023-24, from Rs 5.25 lakh crores the previous year. This constitutes a hike of over 12.5 per cent from last year.
Out of the total budget of Rs 5.96 lakh crore, the Capital outlay is Rs 1.62 lakh crore, allocated for purchasing new military equipment such as fighter jets, submarines, warships, missiles, and others. This represents a 10 per cent increase from last year’s allocation of Rs 1.52 lakh crore.
There is 10% increase in the Revenue allocations from the revised value of 2.59 to 2.7 lakh crores. Majority of which goes into pay and allowances, works, R&D, transportation and training of our armed forces amongst others.
However, the pensions budget has seen a significantrise, from Rs 1.19 lakh crore last year to Rs 1.38 lakh crore this year, which is an increase of around 15 per cent. This part of the budget in future will start to show a much needed decline in next four years as the first batch of Agniveers complete their terms of engagement.