New Delhi [India], February 2 (HBTV): In the Union Budget presented after Operation Sindoor, the Defence Services have received a record allocation of INR 7.85 lakh crore for the financial year 2026–27. The allocation accounts for around two percent of the estimated GDP for the next financial year and represents a 15.19 per cent increase over the Budget Estimates for FY 2025–26, according to the Ministry of Defence.
The total defence outlay constitutes 14.67 per cent of the Central government’s total expenditure, the highest among all ministries.
Apart from meeting the routine operational and modernisation requirements of the Armed Forces, the enhanced allocation will also address financial needs arising from emergency procurement of arms and ammunition undertaken after Operation Sindoor, under both capital and revenue heads. Capital expenditure has been allocated INR 2.19 lakh crore, up from INR 1.80 lakh crore in FY 2025–26. The government said the increase reflects its resolve to transform the Armed Forces to global standards while advancing the goal of Aatmanirbhar Bharat.
Of the total allocation for the Ministry of Defence, 27.95 per cent has been earmarked for capital expenditure, 20.17 per cent for revenue expenditure related to sustenance and operational preparedness, 26.40 per cent for pay and allowances, 21.84 per cent for defence pensions and 3.64 per cent for civil organisations.
According to the ministry, the capital allocation for the Defence Forces in FY 2026–27 stands at INR 2,19,306.47 crore, which is 21.84 per cent higher than the Budget Estimates for FY 2025–26. Of this, INR 1.85 lakh crore has been set aside for capital acquisition, nearly 24 per cent higher than the previous year’s allocation. The ministry described the sharp increase in modernisation spending as a strategic necessity in the prevailing geopolitical environment.
During FY 2025–26, up to the third quarter ending December 2025, the ministry concluded defence contracts worth INR 2.10 lakh crore and accorded Acceptance of Necessity approvals for projects exceeding INR 3.50 lakh crore. Upcoming capital acquisition projects are expected to equip the Armed Forces with next-generation fighter aircraft, advanced weapons systems, ships and submarines, unmanned aerial vehicles, drones and specialised vehicles.
The ministry noted that disruptions in global supply chains and the prioritisation of domestic requirements by exporting nations have reinforced the need for indigenisation. In line with this approach, INR 1.39 lakh crore, or 75 per cent of the capital acquisition budget for FY 2026–27, has been earmarked for procurement from domestic industries.
The ministry said the earmarking of funds would provide confidence to domestic manufacturers and strengthen their role in capability development. It added that higher capital acquisition spending, particularly for indigenous production, is expected to generate long-term economic benefits and employment through the growth of ancillary industries.
Revenue expenditure for defence has been allocated INR 3,65,478.98 crore, an increase of 17.24 per cent over the FY 2025–26 Budget Estimates. Of this, INR 1,58,296.98 crore has been set aside for operations and sustenance, with the remainder allocated for salaries and allowances. The allocation is intended to support procurement of operational stores and spare parts, as well as maintenance of key platforms.
The government has also increased funding for the Border Roads Organisation, raising the capital allocation to INR 7,394 crore in FY 2026–27 from INR 7,146.50 crore in the previous year. The ministry said the funds would support strategically important infrastructure projects, including tunnels, bridges and airfields, while improving last-mile connectivity in border areas.
For veterans’ healthcare, the Ex-Servicemen Contributory Health Scheme has been allocated INR 12,100 crore in FY 2026–27, marking a 45.49 per cent increase over the current year’s allocation. The ministry said the funding would meet medical treatment-related expenditure for veterans and noted that ECHS allocations have risen by more than 300 per cent over the past five years compared to FY 2021–22.
The allocation for the Defence Research and Development Organisation has been increased to INR 29,100.25 crore from INR 26,816.82 crore in FY 2025–26, with INR 17,250.25 crore earmarked for capital expenditure.
Defence pensions have been allocated INR 1,71,338.22 crore, a 6.56 per cent increase over FY 2025–26, to support pension disbursement to more than 34 lakh beneficiaries through SPARSH and other agencies.
In a post on X, Defence Minister Rajnath Singh thanked Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman, stating that the budget would strengthen India’s journey towards a Viksit Bharat and reinforce the vision of Aatmanirbhar Bharat. He said the budget balances security, development and self-reliance, particularly in the aftermath of Operation Sindoor.
Rajnath Singh also described the enhanced allocation for ECHS as a reflection of the government’s commitment to the welfare of ex-servicemen. (ANI)