Defence gets record Rs 7.85 lakh crore, 15% higher than FY26

New Delhi, Feb 1: In a major push to national security and military modernisation, the Ministry of Defence (MoD) has been allocated an all-time high budget of Rs 7.85 lakh crore in the Union Budget 2026-27, marking an increase of 15.19 percent over the Budgetary Estimates (BE) of FY 2025-26.

Presented in the backdrop of the ëOperation Sindoorí, the allocation accounts for about 2 percent of the estimated GDP for the next financial year and constitutes 14.67 percent of the total central government expenditure, the highest among all ministries.

Apart from catering to routine requirements and modernisation of the armed forces, the enhanced allocation will also address additional financial needs arising from emergency procurement of arms and ammunition undertaken after Operation Sindoor, under both capital and revenue heads.

A significant share of the defence budget - Rs 2.19 lakh crore - has been earmarked for capital expenditure, up from Rs 1.80 lakh crore allocated in FY 2025-26.

The government said the enhanced capital outlay reaffirms its resolve to transform the armed forces to global standards, while advancing the strategic objective of ëAatmanirbhar Bharatí.

Of the total allocation to the MoD, 27.95 percent has been earmarked for capital expenditure, 20.17 percent for revenue expenditure related to sustenance and operational preparedness, 26.40 percent for pay and allowances, 21.84 percent for defence pensions, and 3.64 percent for civil organisations.

MODERNISATION

For FY 2026-27, allocation under the capital head for the defence forces stands at Rs 2,19,306.47 crore, which is 21.84 percent higher than the budget expenses of FY 2025-26.

Of this, Rs 1.85 lakh crore has been earmarked for capital acquisition, representing a quantum jump of nearly 24 percent over the capital acquisition budget of the previous year.

The government described the sharp rise in the modernisation budget as a strategic imperative in the current geo-political scenario.

During FY 2025-26, up to the third quarter ending December 2025, the MoD concluded defence contracts worth Rs 2.10 lakh crore and accorded Acceptance of Necessity (AoN) approvals for projects exceeding Rs 3.50 lakh crore.

Upcoming capital acquisition projects include next-generation fighter aircraft, smart and lethal weapons, ships and submarines, unmanned aerial vehicles, drones, specialist vehicles and other advanced platforms aimed at enhancing combat readiness.

AATMANIRBHARTA

Citing disruptions in global supply chains and the need to prioritise domestic requirements, the government has further strengthened its policy of import substitution and indigenisation.

For FY 2026-27, Rs 1.39 lakh crore - about 75 percent of the capital acquisition budget - has been earmarked for procurement from domestic industries, including private sector players.

The move is expected to reassure domestic manufacturers about sustained investment, expand their role in capability development and have a long-term positive impact on the national economy by boosting ancillary industries and employment generation.

OPERATIONAL READINESS

Under revenue heads, the defence budget has made a provision of Rs 3,65,478.98 crore, which is 17.24 percent higher than the budget expenses of FY 2025-26.

Of this, Rs 1,58,296.98 crore has been allocated for operations and sustenance, while the remaining amount will cover salaries and allowances.

The allocation is aimed at facilitating procurement of operationally critical stores, spare parts and maintenance of vital platforms, in addition to meeting day-to-day requirements of the armed forces.

BORDER INFRASTRUCTURE

Reiterating its commitment to strengthening infrastructure in border areas, the government has enhanced the capital allocation for the Border Roads Organisation (BRO) to Rs 7394 crore for FY 2026-27, compared to Rs 7146.50 crore in FY 2025-26.

The allocation will support the execution of strategically important projects such as tunnels, bridges and airfields, while also promoting regional development, tourism and last-mile connectivity in border regions.

HEALTHCARE FOR VETERANS

The budget has reinforced the governmentís commitment to veteransí welfare by substantially increasing the allocation for the Ex-Servicemen Contributory Health Scheme (ECHS).

For FY 2026-27, Rs 12,100 crore has been allotted to ECHS - 45.49 percent higher than the BE of FY 2025-26.

The allocation will fund medical treatment-related expenditure (MTRE) of veterans and their dependents.

Notably, the ECHS allocation has increased by more than 300 percent over the past five years compared to the BE of FY 2021-22.

RESEARCH AND DEVELOPMENT

The allocation for the Defence Research and Development Organisation (DRDO) has been increased to Rs 29,100.25 crore in FY 2026-27 from Rs 26,816.82 crore in FY 2025-26.

Of this, Rs 17,250.25 crore has been earmarked for capital expenditure, underscoring the governmentís focus on indigenous research, development and innovation.

DEFENCE PENSIONS

The total budgetary allocation for defence pensions stands at Rs 1,71,338.22 crore, reflecting a 6.56 percent increase over FY 2025-26 budget expenses.

The amount will be used for disbursal of monthly pensions to over 34 lakh pensioners through SPARSH and other pension disbursing authorities.

DEFENCE MINISTER HAILS

Reacting to the allocation, Defence Minister Rajnath Singh thanked Prime Minister Narendra Modi for allocating Rs 7.85 lakh crore to the defence sector, stating that the budget, coming after the success of Operation Sindoor, further strengthens the governmentís resolve to build a robust and foolproof security system.

In a post on X, Singh said the budget augments the security-development-self-reliance balance and enhances Indiaís military capabilities.

He said that over Rs 2.19 lakh crore had been allocated under the capital head, with Rs 1.85 lakh crore earmarked for capital acquisition, nearly 24 percent higher than FY 2025-26, describing modernisation of the armed forces as a key focus.

On the enhanced ECHS allocation, the Defence Minister termed it a testimony to the governmentís unwavering commitment to the welfare of ex-servicemen and their families.

Singh also congratulated Finance Minister Nirmala Sitharaman for presenting what he termed an ìexcellentî and ìyouth-driven budgetî, prepared under the guidance of the Prime Minister.

He said the budget seeks to ìtransform aspiration into achievementî and ìpotential into performanceî, while laying a strong foundation for ëAatmanirbharí and ëViksit Bharatí.

Inspired by the three ëKartavyasí, Singh said, the budget aims to accelerate and sustain economic growth, fulfil public aspirations and ensure meaningful participation for all. ìTogether, these priorities will drive inclusive development, promote the manufacturing sector, and create sustainable infrastructure, ensuring that the dividends of growth reach every section of society, especially the poor, the underprivileged and the disadvantaged,î he said.