The Union Budget was presented by Finance Minister Nirmala Sitharaman on Tuesday. This year, the Center has set aside over Rs 6.21 lakh crore ($75 billion) for defense.
From 5.94 lakh crore ($72.6 billion) in 2023, that is an increase. What, however, do we know about India’s defense budget? How does it compare with China?
In the fiscal year 2024–2025, India is allocating 12.9% of its overall budget to the defense industry. The estimated capital expenditure is Rs 1,72,000 crore.
The rise in defence spending from the previous fiscal year was 4.79 percent. India has set aside almost a third of its budget—27.67 percent—for capital expenditures, according to News9.
According to Financial Express, this entails obtaining new armaments and systems, such as fighter planes, ships, submarines, unmanned aerial vehicles, and specialized vehicles.
A further 14.82 percent is set aside for revenue-related expenses related to operational readiness. Defense pensions make up 22.72% of the budget, with pay and allowances making up 30.68%. Lastly, civil organizations under the Ministry of Defense have been given 4.11%.
For operational preparedness and sustenance, Rs 92,088 crore have been set out in the budget. This is a 48% increase over the prior fiscal year. Seventy-five percent of the modernization budget, or Rs 1.05 lakh crore, has been set aside by the defence ministry for purchases from Indian companies.
Additionally, the Ex-Servicemen Contributory Health Scheme (ECHS) has received an increase in funding from the Center to Rs 6,968 crore.
The Border Roads Organization was allocated Rs 6,500 crore, a 30 percent increase from the previous fiscal year and a 160% increase from FY 2021–2022.
These monies would be used by the BRO to carry out important projects like the vital tunnels in Himachal Pradesh and Arunachal Pradesh and the Nyoma Airfield in Ladakh. Additionally, the Center raised the defense pension budget to Rs 1.41 lakh crore, an increase of 2.17 percent from the previous fiscal year.
In the preceding fiscal year, India expended more than twenty-five percent of its defense budget on pensions. Sitharaman was thanked by Defence Minister Rajnath Singh. He said that the budget will increase independence.
China spends three times as much on defence as India does. The state-run Global Times claims that China’s defence budget for 2023 was close to $224 billion. According to CSIS, China typically devotes 2% of its GDP to defense expenditures. China formally increased its defense spending to $231 billion in 2024.
That represents its largest allocation in five years and an increase of 7.2% over the previous fiscal year. However, many speculate that China may actually be spending significantly more on defense.
For instance, Beijing declared in writing that it had spent almost $230 billion in 2022. But the Stockholm International Peace Research Institute (SIPRI), for example, pegged the 2022 number at $292 billion. Meanwhile, the International Institute for Strategic Studies (IISS) estimated the defence outlay at $319 billion.
According to a Washington-based think tank called the American Enterprise Institute (AEI), which was cited by India Today, Beijing may be spending as much as $710.6 billion year on defense. The official budget is erroneous, according to Mackenzie Eaglen, senior fellow at the AEI,who was quoted by the source.
Eaglen went on to say that it fails to accurately depict the People’s Liberation Army (PLA) of China’s tremendous modernization and armament build-up.
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According to experts, India is still a long way from matching China.
According to Laxman Kumar Behera, a professor at the Special Centre for National Security Studies at Jawaharlal Nehru University in New Delhi, funding for new systems and platforms is insufficient, particularly given the militarization of the Indo-Pacific region and the instability of the western and northern borders.
Behera said India need to think about a road map for modernizing its armed forces, just as it does for other sectors of the economy, and set aside a specific sum each year for defence.
