New Delhi: The budget for defence in 2025 has grown by 9.52 percent, accounting largely for rising cost of pensions and revenue expenditure, but constitutes a mere 1.9 percent of the projected gross domestic product (GDP) for 2024-25.
When compared to revised estimates, the increase is just 6 percent more than last year’s Rs 6.41 lakh crore, documents showed.
The biggest increase in defence allocation is in the pension category—it constitutes 23.60 percent of the total allocation and stands at Rs 1,60,795 crore. This is a 13.8 percent increase compared to the budgetary estimates of last year which was Rs 1,41,205 crore.
In terms of capital budget allocated for modernisation, including purchase of new fighters, drones, artillery guns, tanks, infantry fighting vehicles, and helicopters, the numbers stand at a mere increase of Rs 8,000 crore—from Rs 1.72 lakh crore in current fiscal to Rs 1.80 lakh crore in the new budget.
However, the armed forces, which were hoping for a huge jump, have failed to utilise the capital budget allocated to them and had to return Rs 13,000 crore.
Incidentally, budget documents do not show specific allocation for the Army, Navy and the Air Force.
Capital budget stands at 26.43 percent of the total defence budget. Out of this, Rs 1,48,722.80 crore is planned to be spent on capital acquisition, termed as the modernisation budget, while the remaining Rs 31,277.20 crore is for capital expenditure on research and development, and creation of infrastructural assets across the country.
Overall, the defence budget is 13.45 percent of the Union Budget, which is the highest compared to other ministries.
Accordingly, for 2025-26, Rs 1,11,544.83 crore—that is 75 percent of the modernisation budget —has been earmarked for procurement through domestic sources and 25 percent of domestic share of Rs 27,886.21 crore provisioned for procurement through domestic private industries.
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Revenue expenditure hiked
On revenue head, allocation for the armed forces stands at Rs 3,11,732.30 crore which is 45.76 percent of the total allocation. This is a jump of 24.25 percent for the next financial year in comparison to the budgetary estimate of the current.
Revenue expenditure is to take care of pay and allowances of the forces personnel and for sustenance and operational preparedness.
For the current fiscal, revenue budget for the armed forces was Rs 2.82 lakh crore, but this had increased to Rs 2.97 lakh crore in the revised estimates.
In a statement, the defence ministry said the new allocation would address the requirement due for the additional deployment of forces in border areas, hiring of vessels, increase in expenditure on longer sea deployment of ships and increase in flying hours for aircraft.
Under the salary head of revenue expenditure, Rs 197,317.30 crore has been allocated to take care of pay and allowances of the three services and any further requirement would be addressed during the mid-year review, the statement said.
ThePrint had earlier reported that border tension with China has led to a year-on increase in sustenance expenditure while depleting fighter jets squadrons, which meant existing ones were flying more than ideal estimates.
The allocation to the Defence Research and Development Organisation (DRDO) has been increased to Rs 26,816.82 crore in FY 2025-26 from Rs 23,855.61 crore in FY 2024-25 – a 12.41 percent hike. Out of this, a major share of Rs 14,923.82 crore has been allocated for capital expenditure and to fund R&D projects.
To boost border infrastructure and facilitate the movement of the armed forces through tough terrains, Rs 7,146.50 crore has been allocated to Border Roads Organisation (BRO) under capital head which is 9.74 percent higher than 2024-25.
The financial provision made for 2025-26 for BRO will focus on promoting the strategic interest of the nation in border areas by constructing tunnels, bridges and roads such as the LGG-Damteng-Yangtse in Arunachal Pradesh, Asha-Cheema-Anita in Jammu and Kashmir and the Birdhwal-Puggal-Bajju in Rajasthan among others.
(Edited by Tikli Basu)
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