The defence budget on Tuesday for the next fiscal saw a modest hike of nearly five per cent with the Government giving a determined push for indigenization to ensure self-reliance. Nearly 68 per cent of the total capital outlay was earmarked for procuring weapons manufactured within the country in an effort to make India a manufacturing hub of the world.
While the total outlay for current financial year 2021-22 was pegged at Rs 3,68,418 crores, Finance Minister Nirmala Sitharaman allocated Rs 3,85,730 crores for the 2022-23. The current fiscal ends on March 31.
However, the government was committed to security of the nation and all the demands of the armed forces for modernization will be met without any budgetary constraints, sources said later.
Nearly 2,01,000.00 crores for the next fiscal was allotted for defence(civil)catering to projects like infrastructure building. If this amount is added to the defence outlay comprising capital and revenue, the overall figure comes to 5.25 lakh crore for 2022-23. Last year's allocation was Rs 4.78 lakh crore.
With the objective of sustaining the momentum of modernization to maintain operational readiness, Rs 1,52,369 crore was set aside for purchasing new weapons, aircraft, warships and other military hardware. The revised capital expenditure for the ongoing was Rs 1,38, 850crores. It means the capital outlay for the coming fiscal saw a jump of Rs 14,000 crores.
As regards boosting the capabilities of the Indian defence industry, 68 percent of the capital outlay was set aside for locally made weapons.
"Sixty-eight per cent of the capital procurement budget will be earmarked for domestic industry in 2022-23, up from 58 per cent in 2021-22," Sitharaman said in her budget speech. The finance minister said defence research and development will be opened up for industry, start-ups and academia with 25 per cent of defence research and development(R&D) budget earmarked for it.
"Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with the DRDO and other organisations through SPV (special purpose vehicle) model," she said.
The minister also said an independent nodal umbrella body will be set up for meeting wide-ranging testing and certification requirements.
Defence Minister Rajnath Singh described as an "excellent move" the proposal in the Budget to set aside 25 per cent of the defence R&D budget for start-ups and private entities in the financial year 2022-23.
He also welcomed Sitharaman's announcement that 68 per cent of the defence capital procurement budget would be allocated towards procurement from domestic industry.
"The 68 percent of 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," he tweeted.
He said substantial amounts have been allocated towards research and development in several sectors including defence. "The proposal to reserve 25 per cent of the R&D Budget for Startups and Private entities is an excellent move," the defence minister said.
However, the major bulk of the overall defence allocation like previous years saw revenue outlay far more than capital expenditure. The revenue budget for the next fiscal was Rs 2,33,000 crores. This allocation caters to expenses on payment of salaries and maintenance of establishments. Separately, an amount of Rs 1,19,696 crore was allocated for defence pensions.
Coming to allocations to the three Services, IAF got the highest capital allocation totaling Rs 55,586 crores. It will enable the IAF to procure aircraft to address the issue of dwindling fighter jet squadron strength.
The Navy was the second highest with a capital budget of Rs 47,590 crores followed by the Army with an outlay of Rs 32,015 crores.