Budget Looks Defence Allocation: The Indian government has slashed the defence budget for FY25 to Rs 4.56 lakh crore, a significant drop from the Rs 6.22 lakh crore previously outlined in the Interim Budget. This adjustment, revealed by Finance Minister Nirmala Sitharaman during her presentation of the 7th Union Budget in the Lok Sabha, marks a notable decrease in funding.

Sitharaman's address began with a statement acknowledging the public's continued trust in Prime Minister Narendra Modi's administration, which has been re-elected for a historic third term. The Finance Minister emphasized the government's commitment to economic stability, noting, "India's economic growth remains a shining exception and is expected to continue positively in the years ahead. Inflation remains low and stable, moving towards the 4% target."

The 2024 budget prioritizes job creation and middle-class support, with Rs 2 trillion allocated for employment initiatives over the next five years. Despite the reduction in overall defence funding, capital expenditure for acquiring new equipment and technology stands at Rs 1.72 trillion, which constitutes 27.67% of the total defence budget.

In February, Sitharaman had revised the FY24 defence budget from Rs 5.94 lakh crore to Rs 6.24 lakh crore. Although the Interim Budget for FY25 included Rs 6.22 lakh crore, marking a 0.4% decrease from FY24, it remained the largest allocation among ministries, accounting for nearly 13% of the central government's total expenditure. The revised figure for FY25, however, is still below 2% of India’s GDP.

The detailed breakdown includes Rs 1.72 lakh crore dedicated to capital acquisition, Rs 92,088 crore for the Armed Forces' revenue expenditure (excluding salaries), Rs 1.41 lakh crore for defence pensions, and Rs 6,500 crore for border infrastructure. Additionally, Rs 7,651.80 crore has been allocated for the Indian Coast Guard, and Rs 23,855 crore for the Defence Research and Development Organisation (DRDO).

India's defence production reached a record high of Rs 1.27 lakh crore for 2023-24, surpassing the previous high of Rs 1.09 lakh crore set in FY23. The Defence Ministry has focused on reducing dependency on imported arms by indigenizing over 12,300 items in the past three years. The goal is to spend around $130 billion on capital procurement over the next five to six years, with plans to increase military hardware exports from Rs 21,083 crore to Rs 50,000 crore by 2028-29.

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