Union Budget 2026–27 Delivers Record ₹7.85 Lakh Crore Allocation for Defence, Signals Strategic Push for Aatmanirbhar Bharat

New Delhi: In a decisive boost to national security and military preparedness, the Union Budget 2026–27 has earmarked an unprecedented ₹7.85 lakh crore for Defence Services, marking the highest-ever allocation to the sector. Presented in the aftermath of Operation Sindoor, the defence outlay reflects a 15.19 per cent increase over the Budget Estimates of FY 2025–26 and accounts for 2 per cent of the estimated GDP for the coming financial year.

The defence allocation constitutes 14.67 per cent of total Central Government expenditure, making it the single largest budgetary allocation among all ministries. Beyond meeting routine operational and personnel requirements, the enhanced funding will also cover financial commitments arising from emergency procurement of arms and ammunition undertaken after Operation Sindoor under both capital and revenue heads.

A significant thrust of the Budget is on capital expenditure, with ₹2.19 lakh crore allocated for defence capital outlay, up from ₹1.80 lakh crore in FY 2025–26. This enhanced provision underscores the Government’s resolve to modernise the Armed Forces and elevate their capabilities to global benchmarks, while firmly aligning defence preparedness with the vision of Aatmanirbhar Bharat.

Of the total Ministry of Defence (MoD) allocation, 27.95 per cent has been earmarked for capital expenditure, 20.17 per cent for operational sustenance and preparedness, 26.40 per cent for pay and allowances, 21.84 per cent for defence pensions, and 3.64 per cent for civil organisations.

Strategic Push for Armed Forces Modernisation

For FY 2026–27, the capital allocation for Defence Forces stands at ₹2,19,306.47 crore, registering a 21.84 per cent increase over the previous year’s estimates. Notably, ₹1.85 lakh crore has been earmarked for capital acquisition, around 24 per cent higher than FY 2025–26, reflecting the strategic imperative of accelerated modernisation in the current geopolitical environment.

During FY 2025–26, the MoD concluded defence contracts worth ₹2.10 lakh crore by December 2025 and accorded Acceptance of Necessity approvals exceeding ₹3.50 lakh crore. Upcoming acquisitions include next-generation fighter aircraft, advanced weapon systems, warships and submarines, unmanned aerial vehicles, drones, specialist vehicles and other cutting-edge platforms.

Strong Thrust on Indigenisation

Reinforcing the focus on self-reliance amid global supply-chain disruptions, the Budget earmarks ₹1.39 lakh crore—75 per cent of the capital acquisition budget—for procurement from domestic industries in FY 2026–27. This move is expected to boost investor confidence, strengthen India’s defence manufacturing ecosystem and generate large-scale employment through the growth of ancillary industries.

Enhanced Revenue Allocation and Operational Readiness

The Budget provides ₹3,65,478.98 crore for revenue expenditure, a 17.24 per cent increase over FY 2025–26. Of this, ₹1,58,296.98 crore has been allocated for operational sustenance, including procurement of critical spares, stores and maintenance of vital defence platforms, ensuring sustained combat readiness.

Focus on Border Infrastructure

Reaffirming its commitment to strengthening border connectivity, the Government has enhanced the capital allocation to the Border Roads Organisation (BRO) to ₹7,394 crore, up from ₹7,146.50 crore in FY 2025–26. The funding will support strategically vital infrastructure such as tunnels, bridges and airfields, while also promoting regional development, tourism and last-mile connectivity in border areas.

Welfare of Veterans and R&D Boost

Veteran welfare has received a major boost, with ₹12,100 crore allocated to the Ex-Servicemen Contributory Health Scheme (ECHS)—a 45.49 per cent increase over the current year. The allocation will meet medical treatment expenses of veterans and their dependents, with ECHS funding having risen by over 300 per cent in the last five years.

The Budget also strengthens defence research, increasing the allocation to DRDO to ₹29,100.25 crore, including ₹17,250.25 crore for capital expenditure, to accelerate indigenous defence technologies.

Defence Pensions and Leadership Response

The defence pension allocation stands at ₹1,71,338.22 crore, a 6.56 per cent increase, covering pension payments to over 34 lakh defence pensioners through SPARSH and other authorities.

Reacting to the Budget, Raksha Mantri Rajnath Singh, in a post on X, expressed gratitude to Prime Minister Narendra Modi and congratulated Union Finance Minister Nirmala Sitharaman for presenting a Budget that transforms “aspiration into achievement” and “potential into performance.” He described it as a “Yuva Shakti–driven Budget” that will further strengthen India’s journey towards an Aatmanirbhar and Viksit Bharat.