MP-IDSA - Issue Brief S

Rajiv and Abhay Kumar Singh February 17, 2023 Summary In the Union Budget 2023–24, of the four demands relating to the Ministry of Defence (MoD), allocations towards Defence Services (Revenue) constitute 45.5 per cent, Capital Outlay on Defence Services constitute 27.4 per cent, Defence Pensions 23 per cent while MoD (Civil) stands at nearly 4 per cent of the total MoD allocations. [...] While the Army’s modernisation budget as a percentage of MoD’s capital allocations reached a high of 25.69 per cent in 2016–17, it has seen an average annual growth rate of 20 per cent over the past 10 years, as against 36.8 per cent for the Air Force and 26.7 per cent for the Navy. [...] The average annual share of defence pensions in CGE since 2014 has stood at 3.7 per cent, while the pension budget as a percentage share of the total MoD allocations and as a percentage of total defence revenue budget since 2014 has been at 23.65 per cent and 32.5 per cent respectively. [...] As regards the individual services, the Army’s pension budget in 2023–24 (BE) is equivalent to 65.3 per cent of its revenue budget, while that of the Navy and the Air Force stand at 21 per cent and 27.3 per cent respectively. [...] As per the Global Innovation Index 2022, India spends just 0.7 per cent of its GDP on R&D, and holds the 53nd rank globally, in terms of the percentage spending on R&D.6 The decision to earmark at least 25 per cent of the defence R&D budget to the private sector, start-ups and academia in the 2022–23 defence budget was a significant step.