Budget Snapshots: Higher Defence Allocation In Capex Is Crucial

There has been a growing sentiment among experts and some decision-makers that the defence allocation in the budget must be increased significantly. 

In the current fiscal, just as in 2024-25, the defence allocation is about 1.9% of the GDP. Defence allocation used to be 3% in the early 2000s. It has been declining since 2020-21, even as budgetary allocations, in absolute numbers, have been on the rise. 

For instance, in Budget 2025-26, there was the provision of ₹6,81,210.27 crore for the Ministry of Defence (MoD), which was 9.53% more than the budgetary estimate of 2024-25.

A few pointers from the budgets and patterns from previous years are as follows: 

• Capital expenditure (as a percentage of the overall defence allocations) in the budget has also seen a declining trend. 
• Capex (at ₹180,000 crore) stood at 26.43% of the total budget allocation in 2025-26, down from 27.65% in 2024-25, and 29% in 2023-24.
  
  
• The "modernisation budget" (₹1,48,722.8 crore on capital acquisition) of the armed forces was allocated. 
• In the "modernisation budget", 75% was earmarked for procurement through domestic sources, and 25% for the domestic share. 
  
  
• A total of ₹31,277.2 crore was for capital expenditure on R&D and the creation of infrastructural assets across the country. 
  
  
• Allocation on revenue head (which is 45.76% of the total allocation) stood at ₹3,11,732.3 crore in 2025-26. 
  
  
• In 2025-26, there was also a 14% increase in the allocation for Defence Pension, with ₹8,317 crore allocated for the Ex-Servicemen Contributory Health Scheme (ECHS). 
  
  
• The budgetary allocation for the Defence Research & Development Organisation (DRDO) increased from ₹23,855.61 crore in 2024-25 to ₹26,816.82 crore in 2025-26.  
  
  
• A total of ₹7,146 crore was allocated to the Border Road Organisation.
  
  
• The 15th Finance Commission recommended that the non-salary component should be allowed to grow at a robust pace to allow a reasonable level of maintenance of defence assets.
  
  
• The Agniveer scheme aims to reduce defence revenue expenditure.
  
  
• To engage private players, ₹449.62 crore was allocated for the Innovations for Defence Excellence (iDEX) scheme, including its sub-scheme, Acing Development of Innovative Technologies with iDEX (ADITI).
  
  
• There was growing demand for the creation of a non-lapsable defence modernisation fund as well.
  
  
• A total of ₹5,000 crore was allocated for the acquisition of advanced light helicopters (ALH), dornier aircraft, fast patrol vessels (FPVs), training ships, and interceptor boats, among others.