The Indian government has proposed 5.94 trillion rupees ($72.6 billion) in defense spending for the 2023-24 financial year, 13% up from the previous year.
The Indian government presented a $549.14 billion budget for the fiscal year 2023-24 starting in April, increasing its defense allocation.
Last year, India earmarked $65.625 billion for defense spending. The increase in the defense budget comes amid increased tensions with China over the disputed border region including parts of Kashmir, Tibet, and Xinjiang.
India’s defense ministry recently approved a budget of 42.76 billion rupees ($522.2 million) to acquire missiles, air defense systems, and naval weapons solely produced by domestic companies.
Defense Modernization
Indian Finance Minister Nirmala Sitharaman, while presenting the annual budget, said that out of the total proposed defense budget, $20.25 billion had been marked down for the modernization of defense establishment. A significant portion of the modernization budget would be used to acquire new weapons, aircraft, warships, and other military hardware and construct roads along its tense border with China.
Major acquisition plans are ready for the armed forces, including fighter jets, light tanks, and submarines on the list. The Indian government reportedly plans to spend a major portion of the modernization budget on the “Make in India” project scheme.
Salaries and pensions
The finance minister further said that about 2.77 trillion rupees would be devoted to military salaries and benefits in 2023-24, while 1.38 trillion will be spent on pensions for retired soldiers, and additional amounts for miscellaneous items.
India also revised the defense budget for the current financial year ending in March to 5.85 trillion rupees from earlier estimates of 5.25 trillion.
Growth focussed budget
The $550 billion annual budget focuses more on job creation, infrastructure development, and providing relief to the middle class as the year 2023 is expected to set the tone for the 2024 general elections, and stakes are very high for the ruling Bharatiya Janata Party (BJP), led by Prime Minister Narendra Modi. As many as nine states are expected to vote in 2023.
- To offer relief to the middle class, the Indian government announced a tax rebate increase on income tax from 500,000 rupees to 700,000 rupees.
- The tax slabs have also been tweaked. The government has also allocated $75 billion (6 trillion rupees) for the rural jobs guarantee scheme for the 2023-24 fiscal year.