Defense Minister Rajnath Singh on Sunday welcomed the Union Budget 2026-27, saying it will further strengthen India’s defense capabilities.
Expressing his gratitude to Prime Minister Narendra Modi, Singh highlighted the record allocation of Rs 7.85 lakh crore for the defense sector.
“I believe that this budget meets the sentiments and expectations of the people. Moreover, this budget provides a strong foundation to the Prime Minister’s vision of ‘Atmanirbhar Bharat’ (Self-reliant India) and ‘Vikas Bharat 2047’ (Developed India by 2047). It includes appropriate provisions for the upliftment of all sections of the society. In this budget, Rs 7.85 lakh crore has been allocated for the defense sector. I express my I am deeply thankful to Prime Minister Modi for this,” the Defense Minister said.
The Defense Minister said that the budget strengthens the country’s commitment to strengthening its defense systems.
“After the historic success of ‘Operation Sindoor’, this budget has strengthened our commitment to further strengthen the country’s defense system. This allocation marks an increase of more than 15 per cent over the last year. This means that once again, the Defense Ministry has received the largest share of the Union Budget. This year, ₹2.19 lakh crore has been allocated for the overall capital expenditure of our armed forces. The most important aspect of this budget is the modernization of the three wings of our armed forces. For the purpose, a provision of ₹1.85 lakh crore has been made this year, which is about 24 per cent more than the last financial year. As a result of this increase, our military capabilities will be further strengthened,” Rajnath Singh said.
“The welfare of ex-servicemen and their families has also been given a prominent place in this budget. A provision of Rs 12,100 crore has been made under the Ex-Servicemen Contributory Health Scheme (ECHS), which is an increase of about 45 per cent compared to the current year. In short, this budget strengthens the balance between security, development and self-reliance,” the minister said.
Defense Secretary Rajesh Kumar Singh highlighted that the capital expenditure outlay has increased by 21 per cent.
“I am happy with the budgetary allocations announced by the Finance Minister as part of this year’s Budget. The total budget of the Defense Ministry is going to be ₹7.85 lakh crore, which is 15 per cent more than last year’s allocation. More importantly, in the area of capex, the total capital expenditure outlay has increased by 21 per cent to about ₹2.9 lakh crore. The most serious thing is that when it comes to modernisation, the budget is actually going to focus on modern equipment and other technology. The upgradation is necessary to enhance the capabilities of our armed forces,” said Rajesh Kumar Singh.
In the Union Budget, the defense services have received an unprecedented allocation of ₹7.85 lakh crore for the financial year (FY) 2026-27. This allocation is 2 per cent of the estimated GDP for the next financial year and represents a significant increase of 15.19 per cent compared to the Budget Estimate (BE) for FY 2025-26. The total defense budget accounts for 14.67 per cent of the central government expenditure and is the highest among all ministries.
Apart from financing the modernization of the armed forces and their regular requirements, the significantly increased allocation will also meet the financial needs arising from emergency procurement of arms and ammunition made after Operation Sindoor under both capital and revenue categories. A major chunk of the defense budget, ₹2.19 lakh crore, has been allocated for capital expenditure, while ₹1.80 lakh crore has been allocated as BE for FY 2025-26. Through this advanced provision, the Government has reaffirmed its resolve to transform the armed forces and their capabilities to the highest standards in the world, with a strategic shift towards the goal of a self-reliant India.
Of the total allocation to the Ministry of Defense (MoD), 27.95 per cent is for capital expenditure, 20.17 per cent for revenue expenditure on sustenance and operational preparedness, 26.40 per cent for revenue expenditure on pay and allowances, 21.84 per cent for defense pensions and 3.64 per cent for civilian organisations.
For FY 2026-27, the budgetary allocation under the capital head for defense forces is ₹2,19,306.47 crore, which is 21.84 per cent higher than the budget estimate for FY 2025-26. Of this, ₹1.85 lakh crore has been earmarked for capital acquisition, which is about 24 percent more than the capital acquisition budget for FY 2025-26. In the current geopolitical scenario, a massive boost to the modernization budget is a strategic imperative. During FY 2025-26, till the third quarter, i.e. till December 2025, MoD has concluded contracts worth ₹2.10 lakh crore and has approved approval of requirement for more than ₹3.50 lakh crore so far. The upcoming projects under the capital acquisition will equip the armed forces with next generation fighter aircraft, smart and lethal weapons, ships and submarines, unmanned aerial vehicles, drones, specialist vehicles and more.
Disruptions in global supply chains and prioritization of domestic requirements over foreign vendors have re-emphasised the need for import substitution and indigenization not only for livelihood but also for future modernisation. In line with this, the Defense Ministry’s policy of allocating funds to promote domestic industries through budgetary measures has been further strengthened by earmarking ₹1.39 lakh crore or 75 per cent of the capital acquisition budget for procurement through domestic industries during FY 2026-27. This reassures domestic players about their investment and their growing role in capability development of the armed forces. The increase in allocation for capital acquisition, especially for domestic industries, will have a long-term positive impact on the national economy and promote the growth of many supporting industries, thereby creating employment opportunities across the country.
A provision of ₹3,65,478.98 crore has been made for expenditure under revenue heads in the defense budget, which is 17.24 per cent more than the allocation for BE 2025-26. Of this, ₹1,58,296.98 crore has been allocated for operating and maintenance expenses, with the remaining amount allocated for salaries and allowances. This allocation will facilitate procurement of operationally critical stores and spare parts and ensure maintenance of critical platforms, besides meeting day-to-day requirements.
The government has reiterated its commitment to provide better infrastructure in the border areas through higher allocation to the Border Roads Organization (BRO). Accordingly, the budgetary allocation to BRO under Capital for BE 2026-27 has been increased from ₹7,146.50 crore for FY 2025-26 to ₹7,394 crore. This allocation will complete strategically important projects like tunnels, bridges and airfields and boost regional development and tourism while providing last-mile connectivity in border areas.
The government has also reaffirmed its commitment to provide better healthcare facilities to veterans and their dependents through increased allocation for the Ex-Servicemen Contributory Health Scheme (ECHS). In the annual budget for FY 2026-27, ECHS has been allocated an amount of ₹12,100 crore, which is 45.49 per cent more than the current year’s allocation in the BE phase. This allocation will finance the medical treatment expenses of veterans. The ECHS allocation has increased by more than 300 per cent in the last five years compared to the BE allocation for FY 2021-22.
The budgetary allocation to the Defense Research and Development Organization (DRDO) has been increased from ₹26,816.82 crore in FY 2025-26 to ₹29,100.25 crore in FY 2026-27. Of this, a major portion of Rs 17,250.25 crore has been allocated for capital expenditure.
The total budgetary allocation for defense pension is ₹1,71,338.22 crore, which is 6.56 per cent higher than the allocation made in the BE phase during FY 2025-26. This amount will be spent on distribution of monthly pension to more than 34 lakh pensioners through Sparsh and other pension disbursing authorities.
