India’s Union Budget 2026-27, presented by Finance Minister Nirmala Sitharaman on February 1, 2026, allocates a record ₹7.85 lakh crore to the Ministry of Defence (MoD)—a 15.19% increase over the FY26 Budget Estimates (₹6.81 lakh crore). This marks the highest-ever defence outlay, representing about 2% of projected GDP and 14.67% of total Central Government expenditure. The boost, coming in the first full fiscal post-Operation Sindoor (a 2025 military operation against terror infrastructure), underscores priorities of modernization, self-reliance (Aatmanirbhar Bharat), and enhanced operational readiness amid border tensions and global uncertainties.
For SSB aspirants, this topic is highly relevant in Lecturettes, Group Discussions, and Personal Interviews. It tests awareness of national security, economic allocation trade-offs, and strategic implications. Candidates should highlight how increased capital expenditure supports indigenization (e.g., under Make in India), reduces import dependency, and bolsters capabilities for multi-domain warfare. Discuss positives like technological edge and welfare measures, while noting challenges such as pension burden (consuming ~22% of the budget) and the need for higher GDP share (ideally 2.5-3% for sustained modernization).
Key Allocations and Breakdown
The defence budget comprises:
- Defence Services (Revenue + Capital): ₹5.85 lakh crore approx.
- Defence Pensions: ₹1.71 lakh crore (6.53% YoY increase).
- Defence (Civil): ₹28,554 crore (slight reduction).
Capital Outlay sees the sharpest rise at ₹2.19 lakh crore (+21.84% over FY26 BE of ₹1.80 lakh crore; +17.61% over RE). Of this, ₹1.85 lakh crore is for capital acquisition (+24% jump), funding next-gen platforms like fighter aircraft, submarines, UAVs, drones, smart weapons, and specialist vehicles. This aligns with reforms like DAP-2020 and DPM-2025, prioritizing domestic procurement (75%+ of modernization budget in recent years).
Revenue Expenditure (for sustenance, pay, and operations) is ₹5.53 lakh crore (including pensions), with services revenue at ₹3.65 lakh crore (+17.24%).
Sectoral focus under capital:
- Aircraft & Aero Engines: ₹63,733 crore.
- Naval Fleet: ₹25,023 crore.
- DRDO: ₹29,100 crore (boost for R&D).
Additional measures include customs duty exemptions on raw materials for aircraft MRO in defence, and enhanced ECHS allocation (₹12,100 crore, +45.49%) for ex-servicemen welfare.
Strategic and Economic Context
Post-Operation Sindoor, the hike addresses emergency procurements and gaps exposed in rapid response. It reinforces indigenization: Indigenous production hit ₹1.27 lakh crore in FY24, with exports at ₹21,083 crore. The budget supports ongoing projects (Rafale-M, submarines, advanced UAVs) and emerging domains like cyber, space, and AI.
As a share of GDP, defence spending hovers at ~1.9-2%, lower than historical peaks (2.4% in 2020-21). Experts advocate raising it to 3% for comprehensive security, balancing salaries/pensions (major chunk) with capex. The allocation crowds in private sector participation, with defence corridors and export promotion.
Raksha Mantri Rajnath Singh termed it a “quantum leap” for military capabilities, aligning with PM Modi’s vision of security-development-self-reliance balance.
SSB Relevance: Points to Discuss
- Pros: Enhances deterrence (e.g., against China/Pakistan), boosts Make in India (reducing forex outflow), creates jobs in defence industry, and signals commitment to Viksit Bharat@2047.
- Cons/Challenges: High pension/revenue burden limits modernization (only ~28% capex); need for efficiency in procurement to avoid delays.
- Way Forward: Prioritize R&D, private innovation, and exports to make India a global defence hub.
- Link to broader themes: How defence spending supports economic growth (via manufacturing) and national integration.
| Component | FY26 BE (₹ lakh cr) | FY27 BE (₹ lakh cr) | YoY Change (%) |
|---|---|---|---|
| Total Defence | 6.81 | 7.85 | +15.19 |
| Capital Outlay | 1.80 | 2.19 | +21.84 |
| Capital Acquisition | ~1.49 (est.) | 1.85 | +24 |
| Revenue (Services) | ~3.12 (est.) | 3.65 | +17.24 |
| Pensions | 1.61 (est.) | 1.71 | +6.53 |
This defence budget positions India as the world’s 4th/5th largest spender, emphasizing qualitative edge over quantitative expansion. For SSB, frame it as a strategic investment in sovereignty.
