India’s Defense Budgeting: A Detailed Analysis

 

India’s Defense Budgeting: A Detailed Analysis

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1. Introduction: Importance of Defense Budgeting

• National Security Imperative: India faces persistent threats from two nuclear neighbors – China and Pakistan.
• Geostrategic Role: India is a major player in the Indo-Pacific, necessitating a strong military presence.
• Technological Modernization: Budgeting supports indigenous defense manufacturing and R&D.
• Force Readiness: Budgeting impacts troop preparedness, welfare, and infrastructure development.

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2. Composition of the Defense Budget

The defense budget in India is allocated under three major heads:

a. Revenue Expenditure (~60–65%)

• Salaries, pensions, daily running costs
• Largest chunk, especially due to a 1.4 million-strong armed forces
• Includes:
• Pay & Allowances
• Maintenance of equipment
• Training costs

b. Capital Expenditure (~35–40%)

• Equipment purchases, modernization, infrastructure
• Allocated for:
• Aircraft, ships, missiles
• DRDO R&D projects
• Strategic infrastructure on borders (e.g., roads, helipads)

c. Pensions (now shown separately)

• Forms nearly 25–30% of the total defense outlay
• Significant financial burden; growing each year
• One Rank One Pension (OROP) scheme adds to the cost

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3. Key Budget Figures (FY 2024–25 as Example)

• Total Defense Allocation: ₹6.2 lakh crore
• Revenue (Service Requirements): ₹2.8 lakh crore
• Capital Outlay: ₹1.7 lakh crore
• Pensions: ₹1.4 lakh crore
• Share in GDP: ~2.0% (lower than China or the US)
• Share in Total Government Expenditure: ~13–14%

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4. Modernization and Capability Building

India is investing heavily in:

• Air Force: Rafale, Tejas Mk-1A, drones
• Army: Light tanks, improved rifles, night vision
• Navy: Indigenous aircraft carriers, submarines (Project 75I), maritime surveillance
• Cyber & Space Warfare: Budget for Information Warfare, satellites
• Missile Defense: S-400 acquisition, indigenous missile programs (Akash, BrahMos)

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5. Focus on Atmanirbhar Bharat in Defense

• 68% of the capital procurement budget earmarked for indigenous systems
• Positive Indigenization Lists released
• Encouragement to Indian private sector & MSMEs
• Defense corridors in Tamil Nadu & UP
• Boost to DRDO, HAL, BEL, BDL, and Bharat Forge-type companies

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6. Comparative Global Perspective

Country	Defense Budget (2024)	% of GDP	Remarks
USA	~$850 billion	3.5%	Global military leader
China	~$230 billion	1.7%	Rapid modernization
India	~$75 billion	2.0%	Third-largest by manpower
Pakistan	~$10.5 billion	~3.6%	Relatively high % due to security obsession

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7. Challenges in India's Defense Budgeting

a. Revenue–Capital Imbalance

• High pension and salary burden limits modernization

b. Underutilization and Delays

• Delays in procurement due to bureaucratic hurdles and red tape

c. Budgetary Constraints

• Competing social and infrastructure needs limit budget increases

d. Dependence on Imports

• Still reliant on Russia, Israel, France for advanced systems

e. Procurement Process Complexity

• Lacks speed, transparency in acquisition procedures

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8. Recommendations for Reform

• Separate Modernization Fund: Especially for emergency procurements
• Improve Procurement Efficiency: Streamline Defense Acquisition Procedures (DAP)
• Budgetary Discipline: Reduce waste and duplication in services
• Revise Manpower Policy: Gradual move toward leaner, tech-oriented force
• Strengthen DRDO–Private Sector Synergy
• Lifecycle Costing: Budgeting should include cost of maintenance, upgrades

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9. Strategic Implications

• Preparedness for Two-Front War: Sustained investments are crucial
• Self-reliance in Defense: Enhances national sovereignty and reduces vulnerability
• Projection of Power: Naval and air force modernization boosts influence in Indian Ocean Region
• Geo-Economic Advantage: Defense exports (e.g., BrahMos) strengthen India's global standing

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10. Conclusion

India’s defense budgeting reflects a delicate balance between strategic needs, economic capacity, and long-term capability building. While the focus on self-reliance, modernization, and jointness is welcome, reforms in procurement processes, pension reforms, and increased capital allocation are essential for India to emerge as a true regional and global military power.