Defence budget touches record Rs. 7.85 lakh crore post Operation Sindoor, focus on modernisation and self-reliance
New Delhi, February 2. In a major push to strengthen national security after Operation Sindoor, the Union Budget for 2026-27 has earmarked a record Rs. 7.85 lakh crore ($85.75 billion) for the defence services, marking the highest allocation ever for the sector.
The defence outlay accounts for about 2 percent of the estimated GDP for the next financial year and represents a 15.19 percent increase over the Budget Estimates for 2025–26. At 14.67 percent of total central government expenditure, defence continues to command the largest share among all ministries.
The Ministry of Defence said the enhanced allocation will not only support routine operational and modernisation requirements of the armed forces but will also meet additional financial needs arising from emergency procurement of arms and ammunition undertaken after Operation Sindoor, under both capital and revenue heads.
Capital expenditure has seen a sharp rise, with Rs .2.19 lakh crore allocated for 2026-27 compared with Rs, 1.80 lakh crore in the previous year’s Budget Estimates. The government said this reflects its commitment to transforming the armed forces to world-class standards, while advancing the strategic goal of ‘Aatmanirbhar Bharat’ (Self-reliant India).
Of the total defence budget, 27.95 percent has been allocated for capital expenditure, 20.17 percent for revenue expenditure linked 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 under the ministry.
For 2026-27, capital allocation for the defence forces stands at Rs. 2.19 lakh crore, an increase of 21.84 percent over 2025-26. Within this, Rs. 1.85 lakh crore has been earmarked for capital acquisition – nearly 24 percent higher than last year. The Ministry of Defence described the steep rise in modernisation spending as a strategic necessity amid the prevailing geopolitical environment.
During 2025-26, contracts worth Rs. 2.10 lakh crore were concluded up to December, while Acceptance of Necessity approvals exceeding Rs. 3.50 lakh crore have already been granted. Upcoming acquisitions are expected to include next-generation fighter aircraft, advanced weapons systems, ships and submarines, drones, UAVs and specialist vehicles.
Reinforcing the push for indigenisation, the government has reserved Rs 1.39 lakh crore – around 75 percent of the capital acquisition budget – for procurement from domestic industries in 2026-27. The ministry said this will boost confidence among Indian defence manufacturers, spur investment, strengthen ancillary industries and generate employment.
Revenue expenditure has been pegged at Rs. 3.65 lakh crore, a 17.24 percent increase over the previous year. Of this, Rs. 1.58 lakh crore will be spent on operations and sustenance, including procurement of spares, stores and maintenance of critical platforms, with the remainder allocated for salaries and allowances.
The budget has also stepped up allocations for border infrastructure, with capital funding for the Border Roads Organisation rising to Rs. 7,394 crore. The funds will support strategically important projects such as tunnels, bridges and airfields, while improving last-mile connectivity and promoting regional development in border areas.
Veterans’ welfare has received a significant boost, with Rs. 12,100 crore allocated to the Ex-Servicemen Contributory Health Scheme – an increase of 45.49 percent over the current year’s Budget Estimates. The allocation will fund medical treatment for veterans and their dependents and reflects a more than threefold rise in ECHS funding over the past five years.
Spending on defence research and development has also increased, with the Defence Research and Development Organisation receiving Rs. 29,100.25 crore for 2026-27, up from Rs. 26,816.82 crore last year. Of this, Rs. 17,250.25 crore has been set aside for capital expenditure.
The defence pension bill has been raised to Rs. 1.71 lakh crore, a 6.56 percent increase, to support monthly pension payments to over 34 lakh pensioners through SPARSH and other agencies.
Reacting to the budget, Defence Minister Rajnath Singh thanked Prime Minister Narendra Modi for the record allocation, saying it strengthens the balance between security, development and self-reliance. In a post on X, Singh also congratulated Finance Minister Nirmala Sitharaman, describing the budget as one that transforms “aspiration into achievement” and reinforces the vision of an ‘Aatmanirbhar’ and ‘Viksit Bharat’.
He said the defence allocation, coming after the success of Operation Sindoor, underscores the government’s resolve to further bolster national security and military capabilities, while the enhanced funding for ECHS reflects its continued commitment to the welfare of ex-servicemen.
