New Delhi: The Ministry of Defence (MoD) has received an all-time high allocation of Rs 7.85 lakh crore in the Union Budget 2026-27, marking a 15.19% increase over the Budget Estimates (BE) of FY 2025-26. This unprecedented allocation, which accounts for 2% of India’s estimated GDP, underscores the government’s commitment to modernising the armed forces, enhancing operational readiness, promoting domestic defence industries, and providing quality healthcare to veterans.
Record Allocation for Capital Expenditure and Modernisation
A significant portion of the budget, Rs 2.19 lakh crore, has been earmarked for capital expenditure, representing a 24% increase in the Capital Acquisition budget compared to FY 2025-26. Out of this, Rs 1.85 lakh crore is allocated specifically for acquiring advanced platforms, including:
- Next-generation fighter aircraft
- Smart and lethal weapons
- Ships and submarines
- Unmanned aerial vehicles (UAVs) and drones
- Specialist vehicles
The budget also addresses emergency procurement of arms and ammunition following Operation Sindoor, ensuring operational preparedness in the current geo-political scenario.
Raksha Mantri Rajnath Singh emphasized that this allocation is a strategic step towards achieving world-class capabilities and advancing PM Modi’s vision of an Aatmanirbhar Bharat.
Thrust on Domestic Industry and Self-Reliance
In line with the government’s import substitution and indigenisation drive, Rs 1.39 lakh crore, or 75% of the Capital Acquisition budget, has been allocated for procurement from domestic industries, including private players.
This move aims to:
- Boost domestic defence manufacturing
- Encourage private sector participation
- Develop ancillary industries
- Generate significant employment opportunities
Raksha Mantri noted that enhanced domestic procurement will have a long-term positive impact on the national economy while strengthening India’s defence self-reliance.
Sustaining Operational Readiness and Revenue Expenditure
The revenue allocation for FY 2026-27 stands at Rs 3,65,478.98 crore, which is 17.24% higher than the BE for FY 2025-26.
- Rs 1,58,296.98 crore will be spent on operations and sustenance
- The remainder will cover salary and allowances
This provision ensures the maintenance of vital platforms, procurement of operationally critical stores and spare parts, and day-to-day operational readiness.
Strengthening Border Infrastructure
The budget continues to focus on border area development, with the Border Roads Organisation (BRO) receiving Rs 7,394 crore under capital expenditure, up from Rs 7,146.50 crore last year.
Key projects include:
- Construction of tunnels, bridges, and airfields
- Enhancing regional development and tourism
- Providing last-mile connectivity in border regions
Prioritising Veterans’ Healthcare
The government has reinforced its commitment to veterans through an enhanced allocation of Rs 12,100 crore for the Ex-Servicemen Contributory Health Scheme (ECHS) – a 45.49% increase over FY 2025-26 BE.
This funding will cover Medical Treatment Related Expenditure (MTRE) for veterans, marking a 300% increase over the last five years.
Boost to Defence Research and Development
The Defence Research and Development Organisation (DRDO) will receive Rs 29,100.25 crore, including Rs 17,250.25 crore for capital expenditure, to continue advancing cutting-edge defence technologies and projects.
Defence Pensions and Welfare
The defence pension budget stands at Rs 1,71,338.22 crore, 6.56% higher than FY 2025-26, catering to over 34 lakh pensioners via SPARSH and other authorised disbursing agencies.
Raksha Mantri Lauds the Budget
Through a post on X, Raksha Mantri Mr Singh thanked Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman, describing the budget as a “Yuva Shakti–driven Budget” aimed at transforming aspirations into achievements.
Under the visionary leadership of PM Shri @narendramodi, India’s journey towards a Viksit Bharat continues to gather momentum. In this spirit, I congratulate Finance Minister Smt. @nsitharaman, for presenting a budget that seeks to “transform aspiration into achievement” and…
— Rajnath Singh (@rajnathsingh) February 1, 2026
He highlighted three key priorities of the budget:
- Accelerating and sustaining economic growth
- Ensuring meaningful participation for all sections of society
- Driving inclusive development while promoting manufacturing and sustainable infrastructure
Singh further noted that the Rs 7.85 lakh crore allocation strengthens the balance between security, development, and self-reliance, particularly in the wake of Operation Sindoor, and reaffirms the government’s resolve to bolster India’s military capabilities.
