Defence and External Affairs Budget Analysis 2025-26

The budgetary allocations for the Ministry of Defence (MoD) and the Ministry of External Affairs (MEA) for the financial year 2025-26 have been presented in the Lok Sabha and Rajya Sabha. The MoD received a total outlay of Rs 6,81,210.27 crore, which represents 13.45 per cent of the total government expenditure. This allocation is a 9.53 per cent increase from the previous year’s budget estimates.

Ministry of Defence Allocation

The MoD’s allocation includes Rs 4.91 trillion specifically for defence services. The capital acquisition budget is set at Rs 1.48 trillion. This budget covers procurement of weapons, systems, equipment, and various defence-related projects. The report marks concerns about the distribution of funds, especially regarding military modernisation. Only28 per cent of the budget is allocated to capital expenditure, while a minimum of 33 per cent is recommended.

Defence Expenditure Trends

Current defence expenditure as a percentage of India’s GDP stands at 1.9 per cent. This figure is lower than it was a decade ago. Singh attributed this to the efficient growth of GDP, which allows for adequate capital expenditure funding. However, delays in contract signing and supplier delivery were identified as challenges. Geopolitical factors, such as conflicts in Europe and West Asia, have also impacted the procurement process.

Ministry of External Affairs Allocation

The MEA’s budget for 2025-26 is set at Rs 20,516.61 crore. This is a decrease of 7.39 per cent from the previous year’s budget estimates and 18.83 per cent lower than revised estimates. Despite this, Foreign Secretary Vikram Misri stated that the MEA can fulfil its international obligations. The budget accounts for only 0.4 per cent of the total government budget, raising questions about its adequacy given the MEA’s expanding role.

Budgetary Dynamics and Recommendations

The MEA has indicated that budgetary demands are a dynamic process. It can request additional funds at the revised estimate stage if necessary. However, the parliamentary panel expressed confusion regarding the MEA’s need for enhanced allocations when it claims satisfaction with the current budget. The MEA is also considering expanding its 216 missions abroad and increasing foreign assistance, which is vital for India’s diplomatic efforts.

Comparative Budget Rankings

In terms of budgetary rankings, the MoD is positioned second after the Ministry of Finance (MoF), while the MEA ranks 22nd. This disparity raises questions about the prioritisation of defence and foreign affairs in the national budget.

Questions for UPSC:

1. Critically examine the implications of reduced defence expenditure as a percentage of GDP on national security.
2. Discuss the role of the Ministry of External Affairs in shaping India’s foreign policy in the context of its budgetary constraints.
3. What are the challenges faced by the Ministry of Defence in modernising the armed forces? Explain.
4. With suitable examples, discuss how geopolitical factors influence defence procurement processes in India.

Answer Hints:

1. Critically examine the implications of reduced defence expenditure as a percentage of GDP on national security.

1. Reduced defence expenditure can lead to insufficient funding for military modernization and readiness.
2. Lower spending may impact the ability to maintain and upgrade military equipment and technology.
3. It could affect recruitment, training, and retention of personnel in the armed forces.
4. National security may be compromised if adversaries perceive a weakened military capability.
5. Long-term reductions could hinder strategic deterrence and response capabilities in crises.

2. Discuss the role of the Ministry of External Affairs in shaping India’s foreign policy in the context of its budgetary constraints.

1. The MEA is responsible for formulating and implementing India’s foreign policy and international relations.
2. Despite budgetary constraints, the MEA manages to fulfill international obligations effectively.
3. It plays important role in diplomatic negotiations, bilateral relations, and multilateral engagements.
4. Limited financial resources necessitate prioritization of missions and strategic partnerships.
5. Increased foreign assistance can enhance India’s influence and soft power globally.

3. What are the challenges faced by the Ministry of Defence in modernising the armed forces? Explain.

1. Budgetary constraints limit the allocation for capital expenditure necessary for modernization.
2. Delays in contract signing and procurement processes hinder timely acquisition of new technologies.
3. Geopolitical factors and global supply chain disruptions impact the availability of defence equipment.
4. Balancing current operational needs with long-term modernization goals poses strategic challenges.
5. There is a need for a coherent policy framework to streamline defence procurement and modernization efforts.

4. With suitable examples, discuss how geopolitical factors influence defence procurement processes in India.

1. Conflicts such as the Russia-Ukraine war have disrupted global supply chains for military equipment.
2. Regional tensions, especially with neighboring countries, necessitate rapid procurement of defence systems.
3. International sanctions and trade restrictions can limit access to critical technology and equipment.
4. Geopolitical alliances, such as with the US, influence procurement decisions and technology transfers.
5. India’s participation in global defence cooperation initiatives shapes its procurement strategies and partnerships.