The upcoming Budget will be Bharatiya Janata Party's second Interim Budget announcement. Finance Minister Nirmala Sitharam, earlier this year, informed the public that they should not expect any "major announcements" during the Interim Budget 2024. However, the defence sector is one of the most crucial sectors in the Indian economy and despite receiving the highest chunk of the Union Budget, the annual allocation is yet to reach its target expenditure. Experts, as well as Parliament Standing Committee, have recommended at least three per cent of gross domestic product (GDP) be spent on defence.
Before the Budget is unveiled on February 1, 2024, here is a look back on India's defence budget highlights over the past decade starting from financial year 2014-15 (FY15) to 2023-24 (FY24). It must be noted that India's defence budget has often surpassed projections due to higher spending on salaries and pensions for the Army, Navy, and Air Force.
Defence Budget 2014
India allocated Rs 2.29 trillion for the Defence Budget in the financial year 2014-15 (FY15), eventually spending Rs 3,17,207 crore. This constituted 19.07 per cent of the central government's total expenditure. The government aimed to boost defence spending by 12 per cent to enhance military capabilities and narrow the gap with China.
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Key points in Defence Budget 2014:
• Proposal to increase Foreign Direct Investment (FDI) in the defence sector to 49 per cent.
• Additional Rs 1,000 crore for "One Rank One Pension."
• Capital outlay increased by Rs 5000 crore, with Rs 1000 crore for border area railway system development.
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• Steps to streamline procurement processes for efficiency.
• Allocation of Rs 100 crore for a war memorial in Princes Park, supplemented by a War Museum.
• Rs 100 crore for a Technology Development Fund for Defence.
• Rs 3,000 crore for modernisation of state police forces.
• Rs 2,250 crore to strengthen and modernise border infrastructure.
• Rs 990 crore for socio-economic development of border villages.
• Rs 150 crore earmarked for the construction of Marine Police Station, jetties, and boats.
• Rs 50 crores for the construction of the National Police Memorial.
Defence Budget 2015
The Defence Budget for FY16 anticipated Rs 2,46,727 crore but eventually reached Rs 3,27,096 crore, constituting 18.27 per cent of the central government's expenditure. The government emphasised the "Make in India" policy to achieve self-sufficiency in defence equipment, including aircraft.
Key points in Defence Budget 2015:
• Pursuing the "Make in India" policy for defence equipment, ensuring transparency and quick decision-making.
• Increased FDI caps in the defence sector.
• Adequate provisions for Defence, Internal Security, and other necessary expenditures.
Defence Budget 2016
The Defence Budget for FY17 was expected to be Rs 2,49,099 crore, eventually exceeding expectations at Rs 3,89,614 crore, constituting 19.73 per cent of the central government's expenditure.
Key points in Defence Budget 2016:
• Approximately 10 per cent more than the previous year's budget estimate.
• Allocations made during critical negotiations for multi-billion dollar deals for fighter jets, helicopters, and howitzers
• Removal of customs duty exemptions on military equipment to encourage local manufacturing.
• Extension of customs duty exemption to private shipyards on warship repair to reduce tax burdens.
Defence Budget 2017
The Defence Budget for the financial year 2017-18 had an expected allocation of Rs 3,59,854 crore (including pensions) but saw actual expenses reach Rs 4,17,242 crore, constituting 19.48 per cent of the central government's expenditure.
Key points in Defence Budget 2017:
• Allocation of 2.1 per cent of GDP, marking the highest among ministries.
• A web-based interactive platform proposed for defence pensioners
• An 11 per cent increase in the defence budget over the previous year.
• Defence expenditure, excluding pension, set at Rs 2.74 lakh crore.
• Capital acquisition component of over Rs 86,400 crore, up from approximately Rs 78,500 crore the previous year.
Defence Budget 2018
The Defence Budget for FY19 was expected to be Rs 2,95,511.41 crore, but the actual expense reached Rs 4,42,683 crore, constituting 19.12 per cent of the central government's expenditure.
Key points in Defence Budget 2018:
• Allocation of Rs 2,95,511.41 crore, with Rs 1,95,947.55 crore for net revenue expenditure and Rs 99,563.86 crore for capital expenditure.
• Defence Pension allocation of Rs 1,08,853.30 crore, 26.60 per cent above the previous year's estimate.
• Capital allocation accounting for 33.1 per cent of the total Central Government Expenditure on Capital Account.
• Customs duty exemption on the import of Defence Equipment not manufactured in India, estimated to augment the Defence Budget by approximately Rs 25,000 crore over the next five years
Defence Budget 2019
The Defence Budget for FY20 was expected to be Rs 3,18,931.22 crore, with actual expenses reaching Rs 4,88,795 crore, constituting 18.20 per cent of the central government's expenditure.
Key points in Defence Budget 2019:
• Continuation of financial expenditures as decided in the Interim Budget of February 2019.
• Defence Pension allocation of Rs 1,12,079.57 crore.
• Total Defence Allocation, including Defence Pension, accounting for 15.47 per cent of the total Central Government expenditure.
• A growth of 7.93 per cent over the Budget Estimates of the previous year.
• Customs duty exemption on the import of Defence Equipment not manufactured in India, potentially augmenting the Defence Budget by around Rs 25,000 crore over the next five years
Defence Budget 2020
The Defence Budget for FY21 had an expected allocation of Rs 4,71,378 crore, and the actual expenses reached Rs 5,23,330 crore, constituting 14.91 per cent of the central government's expenditure.
Key points in Defence Budget 2020:
• Defence Pension allocation of Rs 1,33,825 crore, marking an increase of Rs 40,367.21 crore over the previous year.
• Total Defence Budget accounting for 15.49 per cent of the total central government expenditure.
• A growth of 9.37 per cent over the Budget Estimates of the previous year.
• Allocation of Rs 3,37,553 crore for Revenue (Net) expenditure and Rs 1,18,555 crore for Capital expenditure, including modernisation-related expenditure.
Defence Budget 2021
The Defence Budget for FY22, including pensions, was expected to be Rs 4,78,196 crore, with revised expectations reaching Rs 5,35,508 crore, constituting 14.20 per cent of the central government's expenditure.
Key points in Defence Budget 2021:
• Budget 2021 marked a historic push towards defence modernisation with an 18.75 per cent increase in defence capital outlay.
• The increased allocation of Rs 4,78,195.62 crore for 2021-22, excluding defence pension.
• Capital expenditure increased by 18.75 per cent, reaching Rs 1,35,060.72 crore, the highest increase in 15 years.
Defence Budget 2022
The Defence Budget for 2022-23 had an expected allocation of Rs 5,25,166 crore, with revised expectations reaching Rs 5,55,484 crore, constituting 14.08 per cent of the central government's expenditure.
Key points in Defence Budget 2022:
• Increase in capital allocations to Rs 1.52 trillion.
• Cumulative increase in the capital budget since 2019-20 of Rs 48,975 crore (47.37 per cent).
• A 40 per cent increase in the capital budget of Border Roads Organisation (BRO) to Rs 3,500 crore.
• A 44.53 per cent increase in the capital budget of the Indian Navy to Rs 46,323 crore, focusing on acquiring new platforms and building maritime capabilities.
• A 60.24 per cent increase in the capital budget of the Indian Coast Guard to Rs 4,246 crore for coastal security enhancement.
Defence Budget 2023
The Defence Budget for FY24 was Rs 5,93,537.64 crore, constituting 13.18 per cent of the central government's expenditure.
Key points in Defence Budget 2023:
• An increase of Rs 27,570 crore in non-salary/operational allocations, reaching Rs 90,000 crore in budget expectation (BE) 2023-24.
• Capital allocations for modernisation and infrastructure development increased to Rs 1,62,600 crore, a rise of Rs 10,230 crore (6.7 per cent) over previous year.
• A 43 per cent increase in the capital budget of BRO to Rs 5,000 crore.
• A 9 per cent increase in the allocation to DRDO, reaching Rs 23,264 crore for research & development in Defence.
• Revamped credit guarantee scheme for MSMEs, with an infusion of Rs 9,000 crore, supporting defence sector MSMEs.
• A 52 per cent increase in the allotment for Ex-Servicemen Contributory Health Scheme (ECHS) with a BE allocation of Rs 5,431.56 crore.
