Union Budget: Over Rs 6.81 lakh crore allocated for MoD, defence pension increased by 14 pc

The Union government allocated over Rs 6.81 lakh crore to the Ministry of Defence (MoD) on Saturday and further increased the defence pension by 14 per cent.

An official of the MoD said that In pursuance of Prime Minister Narendra Modi-led government’s vision of ‘Viksit Bharat @ 2047’, with technologically advanced and ‘Aatmanirbhar’ Armed Forces, the Union Budget has made a provision of Rs 6,81,210.27 crore for Financial Year (FY) 2025-26 for the Ministry of Defence.

“This allocation is 9.53 per cent more than the Budgetary Estimate of FY 2024-25 and stands at 13.45 per cent of the Union Budget, which is the highest among the ministries,” the official added.

He said that out of this, Rs 1,80,000 crore i.e. 26.43 per cent of total allocation will be spent on Capital Outlay on Defence Services.

“On Revenue Head, the allocation for the Armed Forces stands at Rs 3,11,732.30 crore which is 45.76 per cent of total allocation. Defence Pension receives a share of Rs 1,60,795 crore i.e. 23.60 per cent and a balance of Rs 28,682.97 crore i.e. 4.21 per cent for civil organisations under MoD. The Ministry has taken a decision to observe 2025-26 as the ‘Year of Reforms’ which will further strengthen the resolve of the government for the modernisation of the Armed Forces and is aimed at simplification in the Defence Procurement Procedure to ensure optimum utilisation of the allocation,” he said.

Addressing the media in New Delhi, Defence Minister Rajnath Singh congratulated Finance Minister Nirmala Sitharaman for presenting a budget to fulfil the Prime Minister’s resolve of Viksit Bharat.

“This budget will promote the development of youth, poor, farmers, women and all other sections of society. Recognising the contribution of the middle class, the budget has brought an unprecedented gift,” said the Defence Minister.

Meanwhile, the official said that Rs 1,80,000 crore has been allocated to the Capital Outlay of the Defence Forces.

“This allocation is 4.65 per cent higher than the Budgetary Estimate (BE) of FY 2024-25,” the official said.

He added that Out of this, Rs 1,48,722.80 crore is planned to be spent on Capital Acquisition, termed as the modernisation budget of the Armed Forces and the remaining Rs 31,277.20 crore is for capital expenditure on Research & Development and the creation of infrastructural assets across the country.

The ministry said that for FY 2025-26, Rs 1,11,544.83 crore i.e. 75 per cent of the modernisation budget has been earmarked for procurement through domestic sources and 25 per cent of the domestic share i.e. Rs 27,886.21 crore has been provisioned for procurement through domestic private industries.

The ministry further added Rs 3,11,732.30 crore has been allocated for this purpose which is 10.24 per cent higher the than budgetary allocation of FY 2024-25.

“Out of this, Rs 1,14,415.50 crore has been allocated on account of non-salary expenditure which will facilitate procurement of ration, fuel, ordnance stores and maintenance/repair of equipment etc,” he said.

The ministry further added that under the Salary Head of revenue expenditure, Rs 1,97,317.30 crore has been allocated to take care of Pay & Allowances of the three services and any further requirement will be addressed during mid-year review.

It said that the budgetary 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 which is 12.41 per cent higher than the BE of 2024-25.

“Out of this, a major share of Rs 14,923.82 crore has been allocated for capital expenditure and to fund the R& D projects,” it said.

To encourage start-up the ecosystem for innovation in defence, Rs 449.62 crore has been allocated to the iDEX scheme, including its sub-scheme Acing Development of Innovative Technologies with iDEX (ADITI) to be utilised for funding the projects to be taken up under this scheme.

The ministry said that allocation in this head shows a jump of almost three times in two years.

The ministry also informed about the government’s resolve for ex-servicemen welfare and in the ensuing FY, Rs 8,317 crore has been allocated towards ECHS which is 19.38 per cent higher than BE of FY 2024-25.

“During the mid-year review in the current FY, additional allocation was made to meet the emergent requirements of medical treatment-related expenditure,” the ministry said.

The ministry further informed that there are approximately 34 lakh defence pensioners whose monthly pension is met out of the Defence Pension Budget.

“In order to further enhance the Defence Pension for the Armed Forces, One Rank One Pension (OROP) was implemented w.e.f. July 2014. Since then, it is revised after every five years. Third revision under OROP came into effect from July 2024 and it was timely implemented,” the ministry said.

It added that considering elements of expenditure under Defence Pension, Rs. 1.61 lakh crore has been allocated for FY 2025-26, which is 13.87 per cent higher than the allocation made during FY 2024-25.

The ministry also informed that that the Indian Coast Guard (ICG) has been allotted Rs 9,676.70 crore under Capital and Revenue Head which is 26.50 per cent more than the allocation for FY 2024-25 at the BE stage.

“A jump of 43 per cent in Capital Budget i.e. from Rs 3,500 crore for FY 2024-25 to Rs 5,000 crore for FY 2025-26 will provide adequate financial space for the acquisition of Advanced Light Helicopters (ALH), Dornier Aircraft, Fast Patrol Vessels (FPVs), Training Ships, Interceptor Boats etc. On revenue head, the allocation has been increased from Rs 4,151.8 crore for FY 2024-25 to Rs 4,676.70 crore for FY 2025-26 which shows an increase of 12.64 per cent,” the ministry said.

For strengthening the border infrastructure and to facilitate the movement of Armed Forces personnel through tough terrains, Rs 7,146.50 crore has been allocated to the Border Roads Organisation (BRO) under the capital head which is 9.74 per cent higher than the BE of 2024-25.