Ratio of defence capex spending climbs a decadal high in FY25, shows Budget data

Defence capex gets a push

Defence capex spending scaled its highest level of Rs 1.72 lakh crore in FY25, shooting up 9.4 percent from the previous fiscal, according to Budget 2024 data.

As a proportion of defence spending, capex was at the highest level of 27.7 percent in FY25, compared with 25.2 percent a year back.

The finance minister, in her first Budget of the third straight Narendra Modi government, kept the defence capex unchanged at Rs 1.72 lakh crore. It had jumped 10 percent in FY24 to Rs 1.57 lakh crore.

The government has set an ambitious target to more than treble the defence production to Rs 3 lakh crore by FY29 and raise exports to Rs 50,000 crore.

Defence production had declined by a third to around Rs 75,000 crore in the previous fiscal compared with Rs 1.09 lakh crore in the previous year. Defence exports had garnered Rs 21,000 crore in FY24.

Overall defence allocation at Rs 6.22 lakh crore was 0.3 percent down from Rs 6.24 lakh crore spent in the previous year. As a share of the GDP, India’s defence spending declined to 1.9 percent to its lowest level in a decade.

The country was the fourth largest military spender in 2023, according to Stockholm International Peace Research Institute database, but its spending was less than a tenth of that of the US and just over a fourth of China’s.

Pensions and revenue expenditure, which primarily pertains to salaries across the forces still accounts for two-thirds of spending, but the share has declined from 70.6 percent from in the previous fiscal.

Pension also witnessed a dip in FY25, following the trend in FY24. In FY23, pension had jumped 31 percent to Rs 1.53 lakh crore on account of implementation of one rank one pension.