Deliberations over the defence budget are never easy. Several factors would have made Finance Minister Nirmala Sitharaman meticulously ponder when she sat down for discussions and calculations on the funds to be set aside for defence sector.
Operation Sindoor and its aftermath, the huge technology leaps by China on the military front and India’s own drive for self-reliance (Atmanirbharta) on one hand and the imperative need for cutting-edge military platforms on an urgent basis were some of the key things that needed to be factored in.
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This is besides the age-old ‘Guns Vs Butter’ debate, which exemplifies a country’s economic tradeoff between spending on military requirements against social sector needs like education, healthcare or infrastructure. But then there can be no compromise of a country’s security needs, hence the government had to deliver what it did.
On Sunday, the Union Budget for fiscal year 2026-27 allocated Rs 7.85 lakh crore for defence, which included Rs 5.5 lakh crore as revenue expenditure estimate and Rs 2.19 lakh crore as the estimate for capital expenditure.
As a result, the defence ministry leads with the highest of allocations among the ministries with a 14.68 per cent share of the total budget—much more than the 13.45 per cent share of the total budget pie last year.
What is interesting here is the capital expenditure aspect, which basically means spending on big-ticket acquisitions in current and subsequent years. It means more buys of advanced and sophisticated fighter aircraft, more naval warships and submarines, and the critically important drones, among others.
Already, the number of dwindling fighter aircraft squadrons—a key power projector—is at an abyssal low, 29 squadrons in place of the mandated 44, and the Chinese warships are taking to the seas at a dizzyingly fast rate.
The 2026-27 allocation is 15.27 per cent more than last year’s total defence budget allocation of Rs 6.81 lakh crore. This year-on-year rate of increase is more than the 9.53 per cent year-on-year hike in last year’s budget.
It signals that the military spending will maintain its trend of being ever on the increase. By extension, it is also indicative of the fact that ensuring greater military preparedness and modernisation will not only maintain but also speed up the tempo.
The total allocation for the ministry of defence in FY27 covers defence services (revenue), capital outlay, defence pensions, and civil establishments under the ministry.
What may also have guided the government’s hand in budget allocations is the realisation that capital-heavy defence expenditure does indeed support the domestic manufacturing ecosystem, which in turn buttresses technological sovereignty and therefore expands the space to practice strategic autonomy, which is a government slogan.
