The 2025-26 Union Budget assigned ₹ 6.81 Lakh Crore, or 13.4% of the total central government expenditure, for the Ministry of Defense (MOD). Of the total budget of the MOD, ₹ 4.92 Lakh Crore, or 72%, is intended for defense services (mainly the army, the Navy, the Air Force and the Defense Research and Development Organization).
Around ₹ 1.61 Lakh million rupees, worth 24% of the total disbursements of the Mindo and the balance of ₹ 28,683 million rupees, or 4%, to serve the ‘civil organizations’ of the mod, which include, among others Things, the Organization of Border Roads and the Coast Guard of India.
Upon reaching the context of a regional and global volatile safety environment, the MOD budget and its distribution among several bosses, evokes several relevant questions, even on their adaptation to meet the needs of the defense forces and their impact on indigenization that The Government of Modi pursues. through his flagship initiative ‘Make in India’.
On the question of adaptation, the MOD budget does not reach expectations. Although the MOD budget has been increased by a decent 9.53%, much of the increase will be neutralized by prevailing inflation (approximately 5%) and a weakening of domestic currency with respect to the US dollar.
Little freedom
To further aggravate high inflation problems and depreciated rupee, the modern budget has little freedom to improve the fire power of defense forces. Historically, the defense budget has been dominated by the cost of labor. The salary and pension in the last budget of the MOD represent 53%, letting the balance extend in a series of other critical articles of expenses that are vital for the modernization and operational preparation of the Armed Forces.
The capital expenditure of defense services, much of which is spent on capital acquisitions and is vital for defense modernization, has been linked to ₹ 1.8 Lakh Crore, an increase of 4.7%. In particular, this marginal increase occurs after a reduction of more than 7% in the previous capital budget.
The underutilization of the previous budget and the marginal increase in capital spending will slow down the process of modernization and indigenization in the future. However, the MOD plans to sign several mega contracts, even for long -term drones, next -generation covers and submarines in the next fiscal year, while they adhere to the same indigenization plan that was articulated in the previous budget . To promote the brand in India in Defense, the MOD has allocated 75% of its new capital acquisition budget of ₹ 1.49 million rupees for acquisitions of the national industry, with 25% of the national participation reserved for the private sector Indian.
While a great participation for the national industry is a welcome step, to put both modernization and indigenization in a rapid path, the mod requires a much larger kitten than it has in successive union budgets. As a percentage of the Gross Domestic Product (GDP), the latest MOD budget amounts to only 1.9%, an action too low for a country that faces two nuclear rivals. The government urgently needs to increase its defense expenses to at least 2.5% of GDP within the close to medium and 3% from then on for a credible defense.
(The author is an associated professor at the Special Center for National Security Studies, Jawaharlal Nehru University, New Delhi.)
Published – February 2, 2025 01:47 am isth