The Author is Former Director General of Information Systems and A Special Forces Veteran, Indian Army

Finance Minister Nirmala Sitharaman presented her 8th Union Budget on February 1, 2025. The defence allocation is marginally increased for FY 2025-2026 to ₹6.8 lakh crore (including pensions), which is 1.9 per cent of the "projected" GDP. Within this allocation, ₹1.8 lakh crore is the capital outlay (for modernisation, R&D and infrastructure), 4.65 per cent higher than last year's Budget Estimates. ₹1,11,544.83 crore (75 per cent of the modernisation budget, has been earmarked for procurement through domestic sources, and 25 per cent of this domestic share, i.e. ₹27,886.21 crore, has been provisioned for procurement through domestic private industries. Allocation for revenue expenditure is ₹3.11 lakh crore (for salaries, operations and logistics) has increased 10.24 per cent over the last year's allocation. ₹1.61 lakh crore has been allocated to cover pensions and revision of One Rank One Pension (OROP), an increase of 13.87 per cent over the previous year.

Budget allocation for the Defence Research and Development Organisation (DRDO) is ₹26,816.82 crore (12.41 per cent more than last years. For defence innovations under iDEX ₹449.62 crore has been allocated, which is a threefold jump in two years. ₹7,146.50 crore has been allocated to the Border Roads Organisation (BRO), an increase of 9.74 per cent over the last year.

The defence allocation is marginally increased for FY 2025-2026 to ₹6.8 lakh crore (including pensions), which is 1.9 per cent of the "projected" GDP.

The Ministry of Defence (MoD) has said in a statement that overall allocation for defence is 9.53 per cent more than the Budget Estimates of FY2024-25. The statement further says that the allocation is aimed at addressing critical capability gaps through big-ticket acquisitions in the current and subsequent financial years. It is meant to help equip the armed forces with state-of-the-art and niche technology-powered lethal weapons, fighter aircraft, ships, platforms, unmanned aerial vehicles, drones, specialist vehicles and more. Under capital expenditure, ₹48,614 crore has been set aside for aircraft and aero engines while ₹24,390 crore has been allocated for the naval fleet.

Notably, ₹13,000 crore of the FY 2024-2025 capital outlay has "lapsed" being unspent. The blame is always attributed to the Armed Forces. In addition is the weakness of Atmanirbharta in Defence, in meeting Armed Forces requirements in timely fashion and in adequate numbers. Despite small defence allocations, periodic calls to allow the carry forward of unused defence allocation into the next year (an issue also voiced by then Defence Minister Jaswant Singh) has been rejected on 'technical grounds' – height of absurdity when the national security is involved; as if a special provision is impossible.

The noise about military pensions has been the ploy to keep the overall defence allocation at levels that turn out as "negative" in actual terms, without taking into account the inflation and rise in prices of defence imports. It has also been covered in these columns that the noise about military pensions by design ignores the following:

• about 37 per cent military pensions goes to civilian-defence employees;
• finance ministry personnel on deputation to MoD get pension from the defence budget;
• we have an absurd ratio of 1:4 civilian defence employees vis-à-vis military personnel;
• each civilian defence employee is four times more expensive than his serving/retired military counterpart;
• expenditure on other government services (salaries, pension, who also get Non-Functional Upgradation (NFU) allowance) is far more than the Armed Forces – which the government is loath to admit.

Budget allocation for the Defence Research and Development Organisation (DRDO) is ₹26,816.82 crore (12.41 per cent more than last year's) but India's R&D investment is just 0.64 per cent of GDP compared to 2.41 per cent and 5.71 per cent in China and Israel respectively.

The MoD says the defence allocation aims to address critical capability gaps through big-ticket acquisitions in the current and 'subsequent' financial years. Are we ignoring the facts that –

• combat capability of the IAF has deteriorated to about 30 fighter squadrons against the authorised 42 despite adding 36 Rafale jets;
• IAF Chief Air Chief Marshal A.P. Singh has stressed the need for timely R&D, embracing failures, increasing R&D funding from five per cent to 15 per cent of the budget, and asks when will the 40 LCA Tejas ordered by IAF more than a decade ago be delivered;
• the Air Chief also points out that the only way forward is to establish (mid-term and long-term) global partnerships – what the government should have ensured all these years;
• India's R&D investment is just 0.64 per cent of GDP compared to 2.41 per cent and 5.71 per cent in China and Israel respectively;
• limiting innovation in critical sectors like semiconductors and Internet of Things (IoT) devices;
• assembly operations are in India successful but component manufacturing, especially of high-complexity, remains nascent;
• Army' Sanjay Battlefield Surveillance System (which was to be fully inducted in 2017) is being inducted in 2025;
• the Indian Navy doesn't operate a single AIP-equipped while Pakistan navy has three AIP-powered subs and their number would increase to 11 by late 2020s-early 2030s;
• we are way behind China in hypersonic, cyber, electromagnetic, space, cyberspace, drone, air and naval capability;
• China and Pakistan have significantly strengthened defence collaboration through strategic agreements and JVs from fighter jets to submarines and warships;
• the much hyped DRDO reorganisation is stalled.

These are but a few examples.

Trump has also been mentioning trade tariffs on India. After Prime Minister Narendra Modi spoke to POTUS Donald Trump on January 27, a statement by White House said, "The President (Donald Trump) emphasised the importance of India increasing its procurement of American-made security equipment and moving toward a fair bilateral trading relationship." Now that the Modi-Trump meeting is scheduled to take place on February 13, Trump would use the tariffs blackmail to extract maximum advantage by India increasing procurement of American-made security equipment. This implies India will be pressured to buy more and more weapon platforms and defence systems from the US on American terms and prices. Our plans to fit them with indigenous missiles will be shot down by quoting ludicrous prices for the fitment/alterations; as in the past. This, despites the US continuing to derail the LCA Tejas program through non-supply of F-404 engines and America's supply of Apache helicopters having missed the second deadline also.

There appears to be no dearth of money in India, looking at the lakhs of crores spent unofficially on elections, freebies promised by all political parties – as for the Delhi assembly elections on February 5, and the colossal expenditure for political advancement of individuals/parties throughout the year. But when it comes to defence allocations, the allotment has remained under two per cent of the GDP over the last decade. This is also the case for FY 2025-2026 despite the fact that geopolitical tensions are rising. India faces a more assertive China and a volatile neighbourhood with the Pakistan-Bangladesh-China bond getting stronger by the day.

Military modernisation requires more than budgetary lip service. But if political optics were not enough, there are utopian armchair strategists saying there is no need to fear China because we have the BrahMos and nuclear power. War is between two nations, not between militaries alone, requiring application of Comprehensive National Power (CNP), for which military power and national will are important. But given the state of affairs, will we have the political will to respond similarly if China uses tactical nuclear weapons?

Notably, ₹13,000 crore of the FY 2024-2025 capital outlay has "lapsed" being unspent. The blame is always attributed to the Armed Forces.

France was a weak nation when Charle de Gaulle became its president. But he ensured 8-10 per cent of the national income was spent on defence for the next decade, making France a military power. GDP anyway is a measure of what the nation "produces" domestically; which contributes towards Comprehensive National Development (CND). It does not include what revenue the nation earns by way of revenue, taxes, GST and the like. The Gross National Income (GNI), therefore, is much higher which includes the GDP and yet the defence allocation is not even two per cent of the GDP.

The noise about learning from ancient India warfare is deafening these days but have we figured out why the Maurya Empire was the largest in Indian history with borders far beyond present day India, and why has India failed to find the right mix between security and economy? Chanakya wrote in the Arthashastra that one sixth of the kingdom's income (GNI) should be spent on defence. He doesn't talk of how we define GDP and GNI today and neither mentions pensions. What percentage of the Union Budget would that come to today (18 per cent plus?), and have we ever come close to it since Independence? Resultantly, our Armed Forces are ill equipped and undermanned.

The options for us are to follow Charles de Gaulle and Chanakya. This will require political will beyond optics and the current focus on winning elections.