In the first budget since India's military offensive against Pakistan, Operation Sindoor, and the four-day intense stand-off between the two countries in May, the Centre allocated ₹7.85 lakh crore to the defence sector for boosting India's defence capabilities. This 15.3 per cent increase, compared to the previous year.
Media reports suggest that the total allocation for defence ministry in FY27 covers defence services (revenue), capital outlay (defence), defence pensions, and civil establishments under the ministry.
The increased allocation signals a continued focus on military readiness, modernisation, and personnel welfare.
Presenting the Budget for 2026-27 in Lok Sabha, Finance Minister Nirmala Sitharaman said India will continue to take steps towards becoming a Viksit Bharat.
In the last Union budget, the government had made a provision of Rs 6,81,210.27 crore for the Financial Year (FY) 2025-26. The allocation was 9.53 per cent more than the budgetary estimate of FY 2024-25 and stood at 13.45 per cent of the Union Budget. The allocation was the highest among the Ministries.
As the India-Pakistan military conflict highlighted the importance of making the armed forces well-equipped with state-of-the-art weaponry, including technologically advanced aerial vehicles which have become a constant in modern warfare, there has been an expectation that the budgetary outlay for the defence sector will be significantly enhanced.
Reacting to the increase in defence spend, Uday Kotak, Founder & Director, Kotak Mahindra Bank, in a tweet said, "Budget first take. A budget for the real economy. Welcome increase in defence spend. Broad fiscal discipline continues. Works on balancing between financialisation of the economy, and focused development of diverse, deep India long term."