Defence Budget 2022-23 has been increased to 5.25 lakh crore for 2022-23 from the previous FY allocation of 4.78 lakh crore with a major push on ensuring self-reliance in manufacturing of military platforms
|The Author is Former Director General of Information Systems and A Special Forces Veteran, Indian Army|
Presenting the Union Budget 2022-23 in Parliament on February 1, 2022, Finance Minister Nirmala Sitharaman announced: 68 per cent of capital budget of the Armed Forces earmarked for domestic industry (10 per cent increase from the 58 per cent in 2021-22); Defence R&D opened up for industry, startups and academia with 25 per cent defence R&D budget; private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with DRDO and other organisations through SPV model, and; an independent nodal umbrella body will be set up for meeting wide ranging testing and certification requirements.
A total of 1,52,369 crore has been set aside for capital expenditure that includes purchasing new weapons, aircraft, warships and other military hardware
Earlier on January 28, 2022, media reported that the Armed Forces have recorded an unusually slow pace of expenditure in capital budgets of FY 2021-22. The report attributed the reason to the Services having projected the revised requirement for capital budgets much higher than allocated in 2021-22. The report said that the Army, Navy and Air Force so far had spent only 40, 90 and 70 per cent respectively out of the capital outlay.
Defence Minister Rajnath Singh has asked the Services to expedite spending of capital budgets; 64 per cent earmarked in 2021-22 compared to 58 per cent during 2020-21. Overall Defence Budget 2021-22 is 4.78 lakh crore, of which the capital budget is 1.35 lakh crore. The capital outlay for the Army in the ongoing financial year was 36,000 crore, for the Navy it was 33,000 crore and for the IAF it was 58,000 crore.
Main reasons for the unusually large unexpended capital outlay of 2021-2022 are as under:
Defence Budget 2022-23 has been increased to 5.25 lakh crore for 2022-23 from the previous FY allocation of 4.78 lakh crore with a major push on ensuring self-reliance in manufacturing of military platforms. A total of 1,52,369 crore has been set aside for capital expenditure that includes purchasing new weapons, aircraft, warships and other military hardware.
According to Defence Budget 2022-23 documents, an allocation of 2,33,000 crore has been made for revenue expenditure that includes expenses on payment of salaries and maintenance of establishments. Separately, an amount of 1,19,696 crore has been allocated for defence pensions while 20,100 crore has been set aside for the Ministry of Defence (Civil).
68 per cent of the defence capital procurement budget has been allocated towards local procurement
Defence Minister Rajnath Singh tweeted,"68% of the defence capital procurement budget has been allocated towards local procurement. It is in line with the 'Vocal for Local' push and it will certainly boost the domestic defence industries. The proposal to reserve 25% of the R&D Budget for Startups and Private entities is an excellent move.” He also said substantial amounts have been allocated towards research and development in several sectors including defence.
The 68 percent of defence capital procurement budget has been allocated towards local procurement.— Rajnath Singh (@rajnathsingh) February 1, 2022
It is in line with the ‘Vocal for Local’ push and it will certainly boost the domestic defence industries.
Substantial amounts have been allocated towards Research and Development in several sectors including Defence.— Rajnath Singh (@rajnathsingh) February 1, 2022
The proposal to reserve 25 percent of the R&D Budget for Startups and Private entities is an excellent move.
The defence budget is divided under four broad heads: capital outlay (for new, big-ticket acquisitions and modernisation); revenue; miscellaneous including various administrative expenses, and; defence pensions. Subdivision of the budget to the three services for FY 2022-23, especially for modernisation, has not been announced yet. However, the following issues need to be borne in mind by the policy makers and the establishment:
The proposal to reserve 25 per cent of the R&D Budget for Startups and Private entities is an excellent move
Finally, talking of defence of India, defence budgets and defence procurement (indigenous or otherwise) has little meaning in absence of a national security strategy. The Service Chiefs too need to speak up in this regard. Taking into account the mounting threats, the government needs to integrate the military in formulation of security strategies, for example, has the dual threat to the nation ever been discussed at the national level? It would be prudent to elevate the CDS to five-star rank and include him as permanent member of the Cabinet Committee on Security.
"Thales welcomes the forward looking statements by the Union Finance Minister that seek to strengthen the vision of Aatmanirbhar Bharat. The allocation of 68 percent of the defence procurement budget for domestic equipment in FY23 is a positive step towards self-reliance. Moreover, efforts to foster innovation by earmarking 25% of Defence R&D budget to private firms, start-ups, and academia bode well for all stakeholders and will allow international OEMs to bring more technology into India. We also appreciate the budget's emphasis on collaboration between government and industry, with private companies urged to take on the design and development of military platforms in collaboration with DRDO. These steps will enhance local capabilities and build our expertise at a world class level. We, at Thales, remain committed to strengthen our industrial footprint in India by developing our local teams, futuristic technologies and partnerships in line with the 'Make in India' initiative.”
—Ashish Saraf, VP and Country Director for Thales in India