Union Budget 2022 has increased capital allocation for defence by 9.82 percent for the FY 2022-23. This increase in the budget outlay and the framework for defence allocations is crucial especially in the backdrop of heightened military tensions with China at the LAC and government’s push for indigenization of critical defence technology and manufacturing ecosystem. Here are the key takeaways for defence outlay from the Union Budget 2022:
1. The total defence allocation for FY 2022-23 is ₹5,25,166.15 crore, which is a 9.82 percent increase from current FY’s (FY 2021-22) allocation of ₹4,78,196 crore. This is a 2.3 percent of India's GDP
2. Capex increased by 12.8 percent:
Out of this total defence budget, ₹1,52,369 crore have been allocated for capital expenditure (capex) on crucial military assets, equipment and ammunition such as fighter jets, warships and new arms. This is a 12.8 percent increase from last year's capex for hardware which was ₹1,35,000 crore.
3. Allocation for seperate forces:
Out of this ₹1,52,369 crore capex, the Indian Army has been allocated ₹32,015.26 crore (a 12 percent decrease from current FY), The Indian Navy has been allocated 47,590.99 crore (a 43 percent increase from the current FY), and the India Air Force has been allocated ₹55,586.65 crore (around 4.5 percent increase from the current FY).
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4. From the defence outlay, a capital of ₹2,33,000 crore has been allocated for revenue expenditure such as salary payments as well as maintenance of immovable assets such as establishments. ₹1,19,696 have been allocated for payment of pensions while ₹20,100 have been allocated for the Ministry of Defence (civil), as per a report by The Economic Times.
5. Boost for defence Indigenisation:
In line with the principle of Atmanirbhar Bharat (self-sufficiency), impetus has been provided to the development of indigenous defence technology and manufacturing ecosystem. “68 per cent of the capital procurement budget will be earmarked for domestic industry in 2022-23, up from 58 per cent in 2021-22,” the Budget read.
Further, in a groundbreaking announcement, research and development (R&D) in defence technology will be opened up to the private industries, start-ups and academia for which 25 percent of the R&D budget has been earmarked. The private sector will be encouraged to collaborate with public sector defence enterprises, such as DRDO via a Special Purpose Vehicle (SPV) model which will help establish joint ventures for developing critical military technology.
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6. The Ministry of Defence will also set up an “independent nodal umbrella body will be set up for meeting wide ranging testing and certification requirements,” the Budget further read.
7. Raksha Mantri Rajnath Singh welcomed the defence outlay and capital allocation for boosting indigenous manufacturing. “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 after the budget. “The proposal to reserve 25 per cent of the R&D Budget for Startups and Private entities is an excellent move,” he further said.
