In
the Union Budget post Operation Sindoor, Defence Services have received an unprecedented allocation
amounting to Rs 7.85 lakh crore for the Financial Year (FY) 2026-27. This
allocation stands at 2% of the estimated GDP for the next Financial Year and
shows a significant increase of 15.19% over the Budgetary Estimates (BE) of FY
2025-26. Total Defence budget is 14.67% of the Central Government expenditure
and is the highest among the Ministries.
In
addition to the modernisation of the Armed Forces and financing their regular
requirement, the significantly enhanced allocation will also cater for the
financial requirements that have arisen due to the emergency procurement of
arms and ammunition made subsequent to Operation
Sindoor under both the categories viz. Capital and Revenue. A large
share of the defence budget to the tune of Rs 2.19 lakh crore has been allotted
for capital expenditure vis-à-vis Rs 1.80 lakh crore which was allotted as BE
of FY 2025-26. Through this enhanced provision, the Government has reaffirmed
its resolve to transform the Armed Forces and their capabilities to the world’s
highest standards with a strategic shift towards the goal of Aatmanirbhar
Bharat.
Out
of the total allocation made to the Ministry of Defence (MoD), a share of
27.95% is for capital expenditure, 20.17% for revenue expenditure on sustenance
and operational preparedness, 26.40% for revenue expenditure on pay and
allowances, 21.84% for Defence Pensions and 3.64% for civil organisations.
For
FY 2026-27, budgetary allocation under capital head to the Defence Forces
stands at Rs 2,19,306.47 lakh crore, which is 21.84% more than the Budget
Estimates of FY 2025-26. Out of this, Rs 1.85 lakh crore is earmarked for
Capital Acquisition, which is approximately 24% higher than the Capital
Acquisition budget for FY 2025-26. In the current geo-political scenario,
quantum jump in the modernisation budget is a strategic imperative. During FY
2025-26, up to 3rd quarter i.e.,
till December 2025, MoD has concluded contracts worth Rs 2.10 lakh crore and
has, so far, given Acceptance of Necessity approval for more than Rs 3.50 lakh
crore. The upcoming projects under capital acquisition will equip the Armed
Forces with next generation fighter aircraft, smart and lethal weapons,
ships/submarines, unmanned aerial vehicles, drones, specialist vehicles,
etc.
Interruption
in global supply chains and prioritisation of domestic requirements over
foreign sellers has re-emphasised the need for import substitution and going
for indigenisation not only for sustenance but for future modernisation. In
line with this, MoD’s policy to earmark funds to boost domestic industries
through budgetary policies has been further strengthened by earmarking Rs 1.39
lakh crore i.e., 75% of the
Capital Acquisition budget for procurement through domestic industries during
the FY 2026-27. Through such earmarking of funds, domestic players have been
reassured about their investment and their increasingly greater role in
capability development of the Armed Forces. Enhanced allocation for Capital
Acquisition, especially for domestic industries, will have long term positive
impact on the national economy and will lead to development of many ancillary
industries, creating job opportunities in the country.
Defence
budget has made a provision of Rs 3,65,478.98 crore for spending under revenue
heads. This allocation is 17.24% higher than the allocation for BE 2025-26. Out
of this, Rs 1,58,296.98 crore has been allocated for operation and sustenance
related expenditure and the remaining for salary and allowances. The budgetary
provision made in this regard for the upcoming FY will facilitate procurement
of operationally important stores, spare parts etc. and will ensure maintenance
of vital platforms in addition to catering for their day-to-day requirements.
The
Government has reiterated its commitment to providing better infrastructure in
border areas through higher allocation to the Border Roads Organisation (BRO).
Accordingly, budgetary allocation to BRO under Capital for BE 2026-27 has been
enhanced to Rs 7,394 crore from Rs 7,146.50 crore for FY 2025-26. The said
allocation will cater to many strategically significant projects such as
tunnels, bridges, airfields, etc. and will promote regional development and
tourism, along with providing last mile connectivity in the border areas.
The
budgetary allocation to 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. Out of this allocation, a major share of Rs. 17,250.25 crore is
allocated for capital expenditure.
Text and
photos: MoD