Budget 2023: 44% hike in outlay for procuring fuel, ammo, spares; overall defence budget up by 13%

Of Rs 5.94-lakh crore earmarked for defence sector, Rs 90,000 crore goes to revenue procurements.

Amid tensions with China at the Line of Actual Control (LAC), Finance Minister Nirmala Sitharaman on Wednesday announced a 44 per cent hike in the Indian military’s sustenance budget—Rs 90,000 crore—that will be utilised towards stocking up on fuel, ammunition, and maintenance of assets through procurement of critical spares and other capabilities.

The overall defence budget earmarked for 2023-24 is Rs 5.94-lakh crore—including pensions of Rs 1.38-lakh crore—up by 12.9 per cent from Rs 5.25-lakh crore allocated in the previous (2022-23) fiscal. This is 13.18 per cent of the total budget outlay of Rs 45,03,097 crore.

Excluding the pay and allowances, Rs 90,000 crore was allocated for revenue procurements—procurement of already sanctioned assets in service including renewals and replacements—over the previous fiscal’s allocations of Rs 62,431 crore, spread across works, transportation, ordnance and supply stores.

Top government officials told The Indian Express that a need for additional sustenance funds came in the backdrop of the Russia-Ukraine war which began in February last year, leading to spiralling oil prices and difficulties in procuring spares for India’s Soviet-origin military hardware.

“Moreover, with heightened tensions with China, there has been an increase in border deployment of defence forces, which are undergoing extensive training and an exorbitant amount of flying. The expenditure towards fuel, transportation and logistics costs thus went up and so did the need for additional ammunition and spares,” an official said.

The increased requirement for these funds is also evident with the government enhancing revenue budget allocations by Rs 26,000 crore during a mid-term review in 2022.

The enhanced “operational allocations”, the Defence ministry said, will close critical gaps in combat capabilities and equip the forces in terms of ammunition, sustenance of weapons and assets, and military reserves.

“This will cater to sustenance of weapon systems, platforms including ships, aircraft and their logistics, boost fleet serviceability, emergency procurement of critical ammunition and spares; procuring of niche capabilities to mitigate capability gaps wherever required, progress stocking of military reserves, strengthening forward defences,” the Defence ministry said in a statement.

It added that the enhanced allocations ensured liquidation of carry over liabilities in 2023-24.

Overall, the revenue budget, including the pay and allowances of defence personnel, saw an increase of 17.39 per cent. The revenue budget also includes first-time allocations worth Rs 4,266 crore towards the Agnipath scheme for utilisation in training aids, simulators, and infrastructure. The scheme was announced last year and the first batch of Agniveers across the three services is undergoing training at present.

The defence budget earmarked Rs 1.62-lakh crore towards the capital budget of the Armed Forces. This was a meagre hike of 6.57 per cent in modernisation funds with limited new contracts being signed and much of the scheduled payments and deliveries yet to be made.

In the modernisation budget for the Armed Forces, the Indian Air Force got the highest allocation among the three services at Rs 57,000 crore, which was, however, a mere 3.6 per cent hike from 2022-23.

While the Army was allocated Rs 37,000 crore, a hike of 15.6 per cent from the previous fiscal’s budgetary allocations, the Navy was allocated a capital budget of Rs 52,000 crore, up by 10.6 per cent from 2022-23.

The defence pensions saw a major hike at Rs 1.38-lakh crore—up by 16 per cent from Rs 1.19-lakh crore in 2022-23—considering the increased pensions with the revision of the ‘One Rank, One Pension’ scheme and the arrears worth Rs 28,138 crore.

Additionally, there was a 52 per cent hike in allocations for Ex-servicemen Contributory Health Scheme (ECHS), which stands at Rs 5,431.56 crore against Rs 3,582.51 crore in 2022-23.

To boost border infrastructure, particularly in the North, an allocation of Rs 5,000 crore has been made, up from Rs 3,500 crore in 2022-23.

Among other highlights of the defence budget includes a 9 per cent hike in allocation for Defence Research Development Organisation at Rs 23,264 crore. The seven defence public sector undertakings were allocated Rs 1,310 crore and the Indian Coast Guard’s budget has been cut to Rs 7,197 crore from Rs 7,310 crore in 2022-23.

Union Budget 2023: All you need to know

Amrita Nayak Dutta writes on defence and national security as part of the national bureau of The Indian Express. In the past, Amrita has extensively reported on the media industry and broadcasting matters, urban affairs, bureaucracy and government policies. In the last 14 years of her career, she has worked in newspapers as well as in the online media space and is well versed with the functioning of both newsrooms. Amrita has worked in the northeast, Mumbai and Delhi. She has travelled extensively across the country, including in far-flung border areas, to bring detailed reports from the ground and has written investigative reports on media and defence. She has been working for The Indian Express since January 2023. ... Read More

Amid tensions with China at the Line of Actual Control (LAC), Finance Minister Nirmala Sitharaman on Wednesday announced a 44 per cent hike in the Indian military’s sustenance budget—Rs 90,000 crore—that will be utilised towards stocking up on fuel, ammunition, and maintenance of assets through procurement of critical spares and other capabilities.

The overall defence budget earmarked for 2023-24 is Rs 5.94-lakh crore—including pensions of Rs 1.38-lakh crore—up by 12.9 per cent from Rs 5.25-lakh crore allocated in the previous (2022-23) fiscal. This is 13.18 per cent of the total budget outlay of Rs 45,03,097 crore.

Excluding the pay and allowances, Rs 90,000 crore was allocated for revenue procurements—procurement of already sanctioned assets in service including renewals and replacements—over the previous fiscal’s allocations of Rs 62,431 crore, spread across works, transportation, ordnance and supply stores.

Top government officials told The Indian Express that a need for additional sustenance funds came in the backdrop of the Russia-Ukraine war which began in February last year, leading to spiralling oil prices and difficulties in procuring spares for India’s Soviet-origin military hardware.

“Moreover, with heightened tensions with China, there has been an increase in border deployment of defence forces, which are undergoing extensive training and an exorbitant amount of flying. The expenditure towards fuel, transportation and logistics costs thus went up and so did the need for additional ammunition and spares,” an official said.

The increased requirement for these funds is also evident with the government enhancing revenue budget allocations by Rs 26,000 crore during a mid-term review in 2022.

The enhanced “operational allocations”, the Defence ministry said, will close critical gaps in combat capabilities and equip the forces in terms of ammunition, sustenance of weapons and assets, and military reserves.

“This will cater to sustenance of weapon systems, platforms including ships, aircraft and their logistics, boost fleet serviceability, emergency procurement of critical ammunition and spares; procuring of niche capabilities to mitigate capability gaps wherever required, progress stocking of military reserves, strengthening forward defences,” the Defence ministry said in a statement.

It added that the enhanced allocations ensured liquidation of carry over liabilities in 2023-24.

Overall, the revenue budget, including the pay and allowances of defence personnel, saw an increase of 17.39 per cent. The revenue budget also includes first-time allocations worth Rs 4,266 crore towards the Agnipath scheme for utilisation in training aids, simulators, and infrastructure. The scheme was announced last year and the first batch of Agniveers across the three services is undergoing training at present.

The defence budget earmarked Rs 1.62-lakh crore towards the capital budget of the Armed Forces. This was a meagre hike of 6.57 per cent in modernisation funds with limited new contracts being signed and much of the scheduled payments and deliveries yet to be made.

In the modernisation budget for the Armed Forces, the Indian Air Force got the highest allocation among the three services at Rs 57,000 crore, which was, however, a mere 3.6 per cent hike from 2022-23.

While the Army was allocated Rs 37,000 crore, a hike of 15.6 per cent from the previous fiscal’s budgetary allocations, the Navy was allocated a capital budget of Rs 52,000 crore, up by 10.6 per cent from 2022-23.

The defence pensions saw a major hike at Rs 1.38-lakh crore—up by 16 per cent from Rs 1.19-lakh crore in 2022-23—considering the increased pensions with the revision of the ‘One Rank, One Pension’ scheme and the arrears worth Rs 28,138 crore.

Additionally, there was a 52 per cent hike in allocations for Ex-servicemen Contributory Health Scheme (ECHS), which stands at Rs 5,431.56 crore against Rs 3,582.51 crore in 2022-23.

To boost border infrastructure, particularly in the North, an allocation of Rs 5,000 crore has been made, up from Rs 3,500 crore in 2022-23.

Among other highlights of the defence budget includes a 9 per cent hike in allocation for Defence Research Development Organisation at Rs 23,264 crore. The seven defence public sector undertakings were allocated Rs 1,310 crore and the Indian Coast Guard’s budget has been cut to Rs 7,197 crore from Rs 7,310 crore in 2022-23.

Union Budget 2023: All you need to know