Capital outlay, revenue spending and pensions remain key pillars of defence outlay
The government on Sunday allocated ₹7.85 lakh crore to the defence sector in the Union Budget 2026, higher than the ₹6.81 lakh crore provided in FY26, signalling a continued focus on military readiness, modernisation, and personnel welfare.
According to Budget documents, the total allocation for the Ministry of Defence in FY27 covers defence services (revenue), capital outlay, defence pensions, and civil establishments under the ministry.
In the previous Budget, the Centre had earmarked ₹6.81 lakh crore for defence, making it one of the single largest components of overall government expenditure.
Of the FY26 allocation, defence services (revenue)—which includes expenditure on salaries, allowances, maintenance, and operational preparedness—accounted for ₹3.12 lakh crore.
Defence spending remains a critical component of the government’s broader public investment strategy, with officials repeatedly emphasising that capital-heavy defence expenditure supports domestic manufacturing, strengthens strategic autonomy, and improves long-term preparedness.
The government has also maintained that a growing share of defence capital outlay will continue to be directed towards domestic industry, in line with the push for self-reliance in defence production.
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