Defence Budget 2022-23
The defence budget for 2022-23 at Rs. 5.25 lakh crore has breached the five-lakh crore level and marks an increase of 9.8% from the BE 2021-22 of Rs. 4.78 lakh crore. However, when compared to the RE 2021-22 the increase is in the range of 4.4%. The Revenue Capital breakup of BE 2021-22 and BE 2022-23 is as follows:
BE 2021-22 BE 2022-23
Revenue Capital Total Revenue Capital Total
337961 140234 478195 364746 160420 525166
The Capital Outlay for the Defence Services has got the highest step up from a BE 2021-22 of Rs. 1,35,061crore to Rs.1,52,369 crore which in percentage terms is 12.8 %. The RE 2021-22 was Rs.1,38,851 crore. However, a closer examination of the major heads relating to Modernization do not present a uniform increase and reveal a skewed service wise picture with gaps in capacity to utilize the allocations.
Army in particular has been lagging and against an allocation of Rs. 36,482 crore in BE 2021-22 the RE figure is Rs. 25,377 crore which is a steep drop of 30%. BE 2022-23 of Rs.32,015 crore is also lower than the previous year’s BE allocation. Army has also had a drop in all the three heads under Modernization budget – Aircraft &Aeroengines, Medium & Heavy Vehicles and Other Equipment.
Navy on the other hand was the opposite from the Army and against an allocation of Rs. 33,254 crore in BE 2021-22 the RE increased to Rs. 46,022 crore which is an increase of 43% over BE 2021-22. BE 2022-23 is also higher than RE at Rs 47,591 crore. Of the Capital heads for Navy, the major increase is in Naval Fleet which has gone up from Rs. 16,000 crore to Rs. 24,717 crore at RE stage. This perhaps is a pointer to the focus area of Navy for fleet modernisation.
Air Force normally has the highest Capital allocation amongst the services but against the BE 2021-22 of Rs. 53,215 crore the RE was marginally lower at Rs.51,831 crore. BE 2022-23 of Rs. 55,587 crore is about 4.3 % higher than the last BE. It is also noted that the allocation under Aircraft & Aeroengines has dropped from last years BE of Rs. 24,268 crore to Rs. 18,966 crore in current BE while in Other Equipment head there has been a jump from Rs. 24,481 to Rs. 32,309 crore. Against the backdrop of the replacement needed for an aging fleet the reduction will need to be analysed.
Following the corporatization of the Ordnance Factories a new head has been included in the Capital outlay for the Defence services – Investment in Public Enterprises. The seven corporatized entities have been allocated Rs. 1310 croes in BE 2022-23. Ina ddition an emergecy assistnce of bout Rs 2500 crores has been provided for newly created DPSUs.
In keeping with the trend of the last two years the push for the indigenous industry continues and this year the portion of the capital budget earmarked for domestic sector has been further enhanced to 68% whcih is the attempt to reverse the earlier 70: 30 ratio between imported and domestic equipment. In the same vein the opening up of Defence Research & Development budget for start-ups and academia with 25% of budget earmarked from the R&D budget is a welcome step for giving a fillip to indigenous design. The R&D Budget is Rs 11,981 crore and therefore about Rs, 3000 crore may be available to finance R&D in the private sector. Funds have also been allocated for creation f an umbreall nodal agency for industrial testing, trials and certifications.