Budget 2022: Rs 5.25 lakh crore allocated for defence

The defence budget was on Tuesday increased to Rs 5.25 lakh crore for 2022-23 from last year’s allocation of Rs 4.78 lakh crore with a major push on procurement of weapons and military platforms from domestic players as well as to involve them in defence research and development. Finance Minister Nirmala Sitharaman, presenting the Union Budget in Parliament, said 68 per cent of the outlay for defence procurement will be set aside for buying from domestic industry and that 25 per cent of the allocation for defence research and development (R&D) will be kept for collaboration with the private sector.

In another announcement, she said an independent nodal umbrella body will be set up for private players to meet their requirements for testing and new technologies and to get the certification. The overall defence budget of 5,25,166 crore including Rs 1,19,696 crore for defence pensions is an increase of 9.8 per cent compared to last year’s total outlay. The defence budget excluding the pension component stands at Rs 4,05,470 crore.

In the defence budget, Sitharaman allocated Rs 1,52,369 crore for capital expenditure in 2022-23 including purchasing new weapons, aircraft, warships and other military hardware. The capital outlay is an increase of around 10 per cent compared to the revised estimate of Rs 1,38,850 crore for 2021-22. The figure at the budget estimate stage was Rs 1,35,060 crore. According to the budget documents, an allocation of Rs 2,33,000 crore has been made for revenue expenditure that includes expenses on payment of salaries and maintenance of establishments.

Separately, Rs 20,100 crore has been set aside for the Ministry of Defence (civil). Under the capital outlay, the Army has been given Rs 32,015 crore as against Rs 36,481 crore in the budget last year. According to the budget documents, the Army could spend only Rs 25,377 crore out of the allocation. The Indian navy has been given an allocation of Rs 47,590 crore under capital outlay as against last year’s budgetary outlay of Rs 33,253 crore.

According to the revised estimate for 2021-22, the Navy spent Rs 46,021 crore as against the allocation of Rs 33,253 crore. The Indian Air Force has been allocated a total of Rs 55,586 crore as the capital outlay as against last year’s Rs 53,214 crore. According to the budget documents, the IAF could spend Rs 51,830 crore out of the allocation.

In her budget speech, Sitharaman said the government is committed to reducing imports and promoting self-reliance in equipment for the armed forces. “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,” she said.

The finance minister said defence research and development will be opened up for industry, startups and academia with 25 per cent of the defence 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 DRDO and other organisations through SPV (special purpose vehicle) model,” she said.

Defence Minister Rajnath Singh described as an “excellent move” the proposal to set aside 25 per cent of the defence R&D budget for startups and private entities in the financial year 2022-23. Singh 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 per cent 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,” Singh tweeted.

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