With Focus on ‘Self-Reliance’ in Defence, Budget Provides 68% Allocation To Domestic Industry

The total budget for defence has been increased in 2022-23 to Rs 5.25 lakh crore, up from Rs 4.78 lakh crore in 2021-22.

Listen to this article:

New Delhi: Finance minister Nirmala Sitharaman on Tuesday stated that the government was committed to reducing imports and promoting atmanirbharta (self-reliance) in equipment for the armed forces. The total budget for defence has been increased in 2022-23 to Rs 5.25 lakh crore, up from Rs 4.78 lakh crore in 2021-22.

The finance minister said a total of Rs 1,52,369 crore has been set aside for capital expenditure that includes purchasing new weapons, aircraft, warships and other military hardware. This is an increase of nearly 12% over the capital outlay of Rs 1,35,060 crore that was made in the previous Budget. The revised estimate showed the expenditure at Rs 1,38,850 crore in 2021-22.

The Budget 2022-23 has also allocated Rs 2,33,000 crore under the head of revenue expenditure, which would go into the payment of salaries and maintenance of establishments. Apart from this, a sum of Rs 1,19,696 crore has been allocated for defence pensions and Rs 20,100 crore has been set aside for the Ministry of Defence (Civil).

The Union Budget 2022-23 has earmarked a sum of Rs 385,370 crore for capital and revenue expenditure for defence. This is an increase of nearly 11% over the previous Budget. The actual spending on defence in 2020-21 was Rs 340,094 crore. As against this, the previous Budget 2021-22 had allocated Rs 347,088 crore for the sector. The Revised Estimate for 2021-22 was Rs 368,418 crore.

Also read: Snapshot in Eight Charts: Key Sector Allocation in Union Budget 2022

Sitharaman also spoke about how “68% of the capital procurement budget will be earmarked for domestic industry in 2022-23, up from 58 per cent in 2021-22″.

Defence minister Rajnath Singh lauded the setting aside of 25% of the defence R&D budget for start-ups and private entities as an “excellent move”.

Greater emphasis on, special allocation for R&D

According to the notes on the Demands for Grants, the Capital Outlay on Defence Services has been budgeted at Rs 152,369.61 crore in 2022-23 as against Rs 135,060.72 crore in the previous budget for 2021-22.

In her speech, Sitharaman also stated that “Defence R&D will be opened up for industry, startups and academia with 25 per cent of defence R&D budget earmarked. 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. An independent nodal umbrella body will be set up for meeting wide ranging testing and certification requirements.”

The Budget 2022-23 has for the first time provided for capital outlay for prototype development in projects of the Air Force. It has allocated a sum of Rs 1,264.90 crore under the head. No provision was made under this head in the previous budget.

A budgetary support of Rs 1,310 crore has also been provided this year under “investment in public enterprises” for seven different corporations that deal with a wide range of products ranging from armoured vehicles, to advanced weapons, munitions and gliders.

Overall in the “Rupee goes to” section, the Budget stated that a total of 8% went to defence.

Budget for Army aircraft and aeroengines more than halved

Under the head of “Central Sector Schemes and Projects” for the Army, a sum of Rs 32,015.26 crore has been earmarked in the Budget for FY 22-23, which is a reduction of over Rs 4,466 crore from the previous budget. This covers expenditure aircrafts and aeroengines (which has nearly been halved from Rs 4,223.80 crore in 2021-22 to Rs 2,070 crore in 2022-23).

The other items covered in this head include land, construction, heavy and medium vehicles, other equipment, rolling stock, Rashtriya Rifles, National Cadet Corps, Ex-Servicemen Contributory Health Scheme and military farms.

Also read: Top Eight Takeaways From Nirmala Sitharaman’s Union Budget Speech

The capital outlay budgeted for the Navy in 2022-23, however, shows an increase over the previous budget. It has been pegged at Rs 4,7590.99 crore as against Rs 3,3253.55 crore in the previous budget.

The maximum increase under a single head here is in the case of “Naval Fleet” for the budget provides Rs 29,452 crore, an increase of over 80% over the Rs 16,000 crore provided under the head in 2021-22.

In the case of the Air Force there has been a marginal increase in the overall budget provided for capital outlay. The Budget 2022-23 has set aside a sum of Rs 55,586.65 crore for the Air Force as against Rs 53,214.77 crore allocated in the previous budget.