Union Budget 2024: Defense Budget May Exceed ₹6.5 Lakh Crores; Nirmala Sitharaman Signals Pension Increase

Finance Minister Nirmala Sitharaman will present the final budget of the second term of the Modi government on February 1. This budget is going to be an interim budget as the Lok Sabha elections are in a few months. Various sectors have many expectations from this budget. It is said that this time the budget of the defense sector is likely to exceed Rs 6.5 lakh crore.

This time the defense budget is expected to increase by 10-12 percent and is expected to cross Rs 6.5 lakh crore. In the year 2023-24, the budget for the defense sector was Rs 5.94 lakh crore. At this time, a significant increase in the provision of the Agneepath scheme is expected in the defense budget as the scheme is now well underway in all three armed forces and the number of fire fighters is also steadily increasing.

The defense budget is expected to increase in the interim budget on February 1, despite the upcoming Lok Sabha elections. Sources suggest a possible boost in funding for army modernization, pensions, and the Agneepath Yojana. This presents a challenge for the government as they balance popular schemes with the pressure to meet defense sector needs.

The implementation of the revised One Rank One Pension Scheme in the Army is likely to increase the pension budget again. It is Rs 1.38 lakh crore in the current financial year which may go up to Rs 1.5 lakh crore this time. Because the number of pensioners has increased after the amendment in OROP. Similarly, the current budget of Agneepath is Rs 4266 crore and there is a possibility of a 25 percent increase in it.

An expected 10-15% rise in the modernization budget is anticipated. Currently standing at Rs 1.62 lakh crore for the year, the previous increase for defense modernization was around Rs 10,000 crore. However, experts in defense suggested that this was insufficient in light of challenges from China and Pakistan. Consequently, there is an expectation for the finance minister to give particular focus to the modernization budget.

Defense sources have indicated that augmenting the pension budget remains a perennial challenge. Notably, a significant portion of the annual budget increase is consistently allocated to pensions. For instance, in the previous year, the overall defense budget saw an increase of Rs 69 thousand crore, with Rs 19 thousand crore directly allocated to ex-servicemen's pensions. Preceding that, the pension allocation stood at Rs 1.19 lakh crore. The current situation presents a similar challenge, particularly due to the pending disbursement of OROP dues and the escalating pension costs. The forthcoming steps of the finance ministry in harmonizing the various facets of the defense budget are eagerly awaited.

In the last few years, the budget of the defense sector has increased steadily. The defense budget in 2021-22 was Rs 4.78 lakh crore. 5.25 lakh crore in 2022-23. 5.94 lakh crore for 2023-24 thereafter.