Opinion: Budget fails defence R&D

The meagre allocation amounts to shortchanging the vision to become 'atmanirbhar'

By Aarushi, Dr Pavan Kumar

Hyderabad: The Union Budget 2023-24 was much talked about. While tax reform and the boost in public capital expenditure were the highlights, the Budget also gained much attention for allocating the maximum amount of funds for the Ministry of Defence – Rs 5,93,537.64 crore. This amount constitutes about 13.18% of the total Budget outlay of Rs 45,03,097.45 crore, and includes the defence ministry’s revenue and capital expenditure.

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Spending Pattern

In this context, it becomes essential to assess where the ministry will spend this massive amount of funds. According to the Budget statement, of the total defence budget of Rs 5.9 lakh crore, around 23.28% will be used for pensions and 3.8% will be spent on administration and civil expenses of the defence ministry. The percentage of the budget reserved for defence services comes under two heads, revenue and capital. Thus, of the total defence budget, the percentage allotted as revenues for defence services is 45.51%, while that allotted for capital outlays is 27.39%. Revenues include salaries and allowances of defence personnel and are required for developmental and research purposes. The capital outlay lays down the capital expenditure on building infrastructure and strengthening the force.

The total amount reserved for defence services, including both the revenue and capital heads, is Rs 4.32 lakh crore, and is significant for enhancing the capacities of our defence services. The government calculates its spending on defence R&D by taking into account both revenue and capital expenditures. In addition to this, the government, while making its calculations regarding the percentage spent on defence R&D, considers the Budget reserved for defence services (including both revenue and capital) as opposed to the total defence budget.

R&D Crucial

Thus, as our country movs towards becoming atmanirbhar in defence technology capabilities, the role of research and development (R&D) will be crucial. And so will be the investment in this sector. The Budget 2023-24 gives some insights into the nature of spending on R&D in defence. Firstly, the spending on R&D has been increasing in absolute terms. The Budget estimate for 2023-24 reports an absolute increase in R&D as compared with the revised estimates of 2022-23 and the actual estimates of 2021-22.

Moreover, the spending on R&D out of the total spending on defence services (ratio of R&D spending to defence services spending) has seen an increase in this Budget when compared with the revised estimates of 2022-23 and the actual estimates of 2021-22. This might hint towards a good start, yet this allocation fails to consider the importance and urgency of investing in enhancing the domestic military infrastructure and technological capacities in R&D.

Secondly, the ratio of R&D spending to defence services spending has been declining in the last three consecutive Budget estimates. This is important because this decline has its effect on the revised and actual estimates for the year 2021-22 and the revised estimates of 2022-23, as they too report a further decline in relative spending on R&D. Thus, we might expect a decrease in actual spending this year as well.

Therefore, this corresponds to the fact that though the government has been increasing the spending on R&D in absolute terms, the relative spending on R&D is declining in terms of the amount spent on it out of the amount reserved for defence services. This highlights the fact that we are not paying sufficient attention to the need to expand the sector, which will be crucial for long-term gains.

World Powers

Also, if we compare the share of defence R&D of other great powers and rising powers, India’s investment in R&D in defence is dismal. If the United States spends 12% of its defence services budget on R&D, China spends 20% while India spends just around 6%. If India is interested in becoming atmanirbhar in the defence sector, it needs to decrease arms imports and instead start investing in R&D.

Lastly, the spending on R&D as a percentage of the total defence budget is only around 4%. The spending on R&D as a proportion of the total defence budget too has been decreasing over the years. So, even if the budget allocates a higher share for the defence sector, it does not mean that there would be a proportionate increase in the spending on defence R&D.

The current amount earmarked for R&D is sufficiently low to realise our dream of becoming ‘atmanirbhar’ in defence technology capabilities. It would be impossible to boast of having spent massive amounts on enhancing the country’s defensive capabilities. There is an urgent need to invest in the defence R&D sector if we wish to be any close to competing with the great and rising powers. Otherwise, we would be left without help if we could not help increase the budget outlays for this important sector.