The Union Budget for 2013-14 allocated Rs. 2,03,672 crore for defence, a 14% increase over the previous year. While this is a 5.31% increase over the previous year's budget estimate, it represents a reduction in the defence budget as a percentage of GDP from 1.9% to 1.79%. The finance minister promised additional funds if required for national security. The defence minister expressed satisfaction with the allocation despite it being Rs. 50,000 crore less than requested, and the assurance of more funds if needed.

1. In the Union Budget 2013-14, which was tabled in the Lok Sabha on 28 February 2013 by the
Union Finance Minister P. Chidambaram, there is a hike of 14% on Defence Budget over the last
year 2012-13, thus promising more funds required for national security.
Some of the prominent features of the defence budget 2013-14 are as under:
• The Revenue expenditure budget increase for defence is relatively less than the overall Non-
Plan Revenue expenditure budget growth between RE 2012-13 and BE 2013-14;
• Gross Revenue budget for Navy declined from 12748 crore rupees in BE 2012-13 to 12394
crore rupees in BE 2013-14 (there are reductions under salaries, transportation and miscellaneous
heads while there are negligible increases for repairs & re-fitment works and in respect of Coast
Guard);
• Capital budget support for the Indian Coast Guard will be less in 2013-14 –740 crore rupees in
BE 2013-14 vis-à-vis. 899 crore rupees in BE 2012-13;
• The value of supplies of stores (not classified as Capital assets) from Ordnance factories to the
Services will only marginally increase from 11213 crore rupees as per BE 2012-13 to 12141crore
rupees provided in BE 2013-14;
• Ex-Servicemen Contributory Health Scheme (ECHS) – a welfare oriented organisation for ex-
Servicemen and their dependants in the defence set-up – has been allocated less budget (Capital
and Revenue taken together) for the next year as compared to the actual expenditure of 2011-12
and RE of 2012-13; and
• Virtually no funds have been earmarked for development of prototype stores in association
with indigenous trade sources (a token provision of Rs. one crore has been made for the next
year as against 29 crore rupees actually spent in 2011-12 and a BE 2012-13 of 89 crore rupees)
Consider the below given table for a Comparative study of last year and present year
Budget
Source: IDSA
2012-13 2013-14
Defence Budget (Rs. in Crore) 193407.29 203672.12
Growth of Defence Budget (%) 17.63 5.31
Revenue Expenditure (Rs. in Crore) 113828.66 116931.41
Growth of Revenue Expenditure (%) 19.55 2.73
Share of Revenue Expenditure in Defence Budget (%) 58.85 57.41
Capital Expenditure (Rs. in Crore) 79578.63 86740.71
Growth of Capital Expenditure (%) 15.00 9.00
Share of Capital Expenditure in Defence Budget (%) 41.15 42.59
Share of Defence Budget in GDP (%) 1.90 1.79
Share of Defence Budget in Central Government Expenditure
12.97 12.23
(%)

2. Defence Ministry Thursday got Rs 2,03,672 crore for 2013-14, marking a hike of
about 14 percent over last year's revised allocation with Finance Minister P
Chidambaram promising more funds required for national security.
The allocation is up by Rs 25,169 crore from last year's revised estimate of Rs
1,78,503 crore.
The budget estimate last year was Rs 1,93,407 crore but it was slashed by Rs
14,904 crore later by the Finance Ministry owing to the strain on the economy.
In terms of comparison between the budget estimates of the financial year 2012-13
and 2013-14, the hike is 5.31 percent.
The budgetary allocation this year marks a reduction in GDP ration from 1.90 last
year to 1.79 percent.
"I propose to increase the allocation for defence to Rs 2,03,672 crore. This will
include Rs 86,741 crore for capital expenditure," Chidambaram said while
presenting the Budget in the Lok Sabha.
"The Defence Minister has been most understanding and I assure him and the
House that constraints will not come in way of providing any additional
requirement for the security of the nation," he said.
The allocation is about Rs 50,000 crore less than the ministry's demand but
Defence Minister A K Antony was satisfied.
"Factoring the current economic scenario, he (Chidambaram) has been fair to the
Defence sector also by increasing the budget and giving an assurance that should
there be any urgent need in future the same would be provided," Antony told
reporters.
The Defence Ministry is in a major modernisation process with several acquisitions
in the pipeline besides upgradation of infrastructure in the northeast along with
China border.
Among the major acquisitions in the offing are the 126 multirole combat aircraft,
22 Apache attack choppers and 15 heavy-lift choppers.
The Defence Ministry had last year demanded Rs 40,000 crore more for meeting

3. its modernisation requirements in addition to the Rs 1,93,407 crore but that could
not be provided.
Rs 14,904 crore were cut from its budget allocation. Of this cut, Rs 10,000 crore
were from the capital expenditure and the remaining was from revenue
expenditure.
Of the total expenditure of the Government of India, defence expenditure would
account for ten percent which is one percent less than 2012-13.
In 2011-12, the Government had allocated Rs 1,64,415 crore for the defence
ministry and later, it was revised to Rs 1,70,937 crore. Increasing the allocation by
13 percent, the Government gave Rs 1,93,407 crore to the ministry for 2012-13 but
in actual terms it came out to be around 4.45 percent due to the budget cut in
revised estimates.
Under the break up of the budget, Rs 44,500 crore have been allocated for pensions
to be paid to retired defence personnel and the DRDO has been allocated Rs 5,500
crore
Of the Rs 1,16,931 crore allocated for Revenue Expenditure, the Army has been
allocated Rs 81,833 crore, the Navy has got Rs 12,194 core while the IAF received
Rs 18, 295 crore.
Of the Rs 86,741 crore capital expenditure fund, the IAF has the largest share of
over Rs 38,000 crore followed by the Navy and the Army. These funds are used for
modernisation of equipment and raising new formations.
The major portion of these funds would be used to procure aircraft and aero-
engines for the services for which Rs 33,776 crore have been earmarked for the
year 2013-14.