Budget FY25: ₹6.22 lakh crore allocated to defence, highest among all sectors

Finance Minister Nirmala Sitharaman presented her seventh consecutive budget in the Parliament, allocating ₹6.22 lakh crore to the defence sector. This allocation is the highest among all the sectors and amounts to 12.9% of the total budget allocation.

The budget allocation of ₹6.22 lakh crore to the Ministry of Defence (MoD) remains the same as the allocation posted in the interim budget but marks a 4.79% increase in contrast to the allocation tabled in FY 2023-24.

The full budget made a provision of allocating an additional ₹400 crore on innovation in defence through the Acing Development of Innovative Technologies with iDEX (ADITI) scheme.

“As far as the allocation to the Ministry of Defence is concerned, I thank the Finance Minister for giving the highest allocation to the tune of ₹6,21,940.85 crore, which is 12.9% of the total budget of GoI for FY 2024-25,” Defence Minister Rajnath Singh posted on X.

A capital outlay of ₹1.72 lakh crore was set aside in the budget; this formed 27.66% of the total ₹6.22 lakh allocation. This outlay is 9.40% more than the revised allocation for FY 2023-24.

MoD earmarked 75% of the modernisation budget, which amounted to ₹1.06 lakh crore for procurement through domestic industries in this financial year. This will have a “multiplier effect on GDP, employment generation and capital formation, thus providing a stimulus to the economy,” said a press release by the MoD.

“The capital outlay of ₹1,72,000 crore will further strengthen the capabilities of the Armed Forces. Earmarking of ₹1,05,518.43 crore for domestic capital procurement will provide further impetus to Atmanibharta,” Rajnath Singh said.

The budget allocated 14.82% of the total allocation for revenue expenditure on sustenance and operational preparedness, which amounted to ₹92,088 crore. This allocation to sustenance and operational preparedness is 48% higher than the budgetary allocation of FY 2022-23.

The government allocated ₹6,968 crore to the Ex-Servicemen Contributory Health Scheme (ECHS). This allocation is 28% higher than the previous year.

The full budget allocated ₹6,500 crore to the Border Roads Organisation (BRO), 30% higher than the year before and 160% higher over the allocation of FY 21-22. The financial provision made under BRO would fund strategic infrastructure projects in border areas such as the development of Nyoma Airfield in Ladakh at an altitude of 13,700 feet, permanent bridge connectivity to the southernmost Panchayat of India in Andaman and Nicobar Islands, the 4.1 km strategically important Shinku La tunnel in Himachal Pradesh, the Nechiphu tunnel in Arunachal Pradesh and more.

An allocation of ₹7,651.80 crore was made to the Indian Coast Guard (ICG). This allocation is 6.31% more than the allocation of FY 2023-24. Out of this, ₹3,500 crore would be incurred on capital expenditure to address emerging maritime challenges and provide humanitarian assistance to other nations; it would also facilitate the acquisition of fast-moving patrolling vehicles/interceptors, advanced electronic surveillance systems and weapons.

The Defence Research and Development Organisation (DRDO) received a budgetary allocation of ₹23,855 crore in FY 25.

“The allocation to the Technology Development Fund (TDF) scheme stands out to be ₹60 crore, which is specially designed for new start-ups, MSMEs and academia, attracting the young, bright minds interested in innovation and developing niche technology in collaboration with DRDO,” the press release read.

An amount of ₹1,41,205 crore was allocated to defence pensions, which accounted for 22.70% of the total defence allocation. This allocation will be incurred on monthly pensions to about 32 lakh pensioners through the System for Pension Administration (Raksha), or SPARSH, and through other pension disbursing authorities.

The defence sector expects to reach ₹3 lakh crore annually in defence production and ₹50,000 crore in defence export by FY 2028-29, Rajnath Singh had said during a defence summit in February this year.