New Delhi: Funds earmarked for the Ministry of Defence (MoD) declined both as a share of the Centre’s budget and GDP, according to an analysis of the demand for grants 2025-26 by PRS Legislative Research published last month. This, despite its allocation in the Union Budget being the largest across ministries at 13 percent of the government’s total expenditure.
Besides the allocation towards the three defence services, the annual defence budget also includes expenditure on research and development (R&D) and border roads. It covers costs incurred on salaries of armed forces personnel and civilians, pension, modernisation efforts, production establishments and R&D.
In the financial year (FY) 2025-26, the Centre allocated Rs 6,81,210 crore towards the MoD.
Giving a comparison of previous year’s budget, the report said, “In 2014-15, the Centre spent 17 percent of its total budget on defence which reduced to 13 percent as per the budget estimates of 2025-26.”
According to the analysis by PRS, between 2013-14 and 2025-26, compared to an annual increase of 9 percent in defence spending, total central government expenditure increased at an annual rate of 10 percent.
Noting that funds allocated to the armed forces under revenue and capital heads were 20 percent lower than their projected needs between FY 2015-16 and FY 2024-25, PRS pointed out that allocations for the armed forces are based on projections submitted by them during the budget-making stage.
While the revenue budget refers to recurring expenses such as salaries and pensions, which are day-to-day expenses, the capital budget refers to long-term investments in the defence sector such as weapons and equipment procurement.
According to the report, the funds allocated to the armed forces between 2015-16 and 2024-25 were 20 percent lower than their projected needs. By comparison, in the past, the shortfall was higher for the capital budget than the revenue budget.
This was not true for 2023-24 and 2024-25, when the capital budget was in line with projections.
The report further observed that the share of MoD’s budgeted expenditure spent on capital outlay declined. While this was 32 percent in 2013-2014 and less than 30 percent between 2014-15 and 2024-25, it is estimated to spend 28 percent in 2025-2026.
By contrast, in the case of the revenue budget, defence pension increased at an annual rate of 11 percent between 2013-2014 and 2025-2026. “This has been higher than the annual growth in total defence expenditure at 9 percent,” the PRS report said.
As a result, report said, “a substantial share of the defence budget has been spent on pension”. For 2025-2026, it is estimated that 24 percent of the total budget will be spent on pensions.
(Edited by Sanya Mathur)
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