Budget 2023: The Union Budget 2023, set to be announced by the Indian government, is expected to focus on modernising the country's armed forces in light of ongoing tensions with China along the Line of Actual Control (LAC). This will likely lead to increased allocation for defence-related public sector undertakings such as Bharat Dynamics Limited (BDL), Hindustan Aeronautics Limited (HAL), and Bharat Electronics Limited (BEL), potentially leading to an increase in their share prices on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
The tensions between India and China along the LAC have been escalating in recent years, with both countries increasing their military presence in the region. In response to this, the Indian government has been working on modernising its armed forces in order to better defend its borders and protect its sovereignty.
This has led to increased focus on defence allocation in the Union Budget, with the government looking to allocate more funds for the development and procurement of advanced weapons systems, military equipment and other defence-related infrastructure.
This increased focus on defence allocation is expected to benefit several public sector undertakings (PSUs) . PSUs are involved in the production of advanced weapons systems and military equipment for the Indian armed forces.
Vikas Gupta, CEO and Chief Investment Strategist of OmniScience Capital, believes that the defence budget must be substantially increased due to various reasons. He cites ongoing friction along India's border with China since 2017, and earlier, particularly in the North East near Bhutan to Ladakh in the North.
Additionally, India's border with Pakistan has always been volatile, requiring strong defence to prevent infiltration. Furthermore, Gupta highlights the need for monitoring and potentially taking control of Pakistan-China highways that pass through Indian territory.
The Union Budget 2023 is also expected to provide a target for defence allocation for the next financial year. This will give a clear indication of the government's spending plans for the defence sector and will provide investors with a better understanding of the opportunities available in the sector.
FAQs
Q1. How many wars did India win?
The Indian Military has been involved in four wars in the country's history, three against Pakistan and one against China, in which India emerged victorious in all of them.
Q2. What is LAC?
The Line of Actual Control (LAC) refers to the theoretical boundary that divides Indian-administered land from Chinese-administered land in the context of the Sino-Indian border dispute.
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