Union Budget 2026: Defence allocation rises to Rs 7.85 lakh Cr, boost for capital outlay, revenue services and pensions

The Union Budget 2026 covers the total allocation for the Ministry of Defence, including defence services (revenue), capital outlay, defence pensions, and civil establishments under the ministry.

The Union Government has unveiled the Defence Budget for 2026–27, outlining a clear focus on strengthening India’s military capabilities, operational preparedness and welfare of personnel.

According to Budget 2026 documents, the total allocation for the Ministry of Defence covers defence services (revenue), capital outlay, defence pensions, and civil establishments under the ministry.

According to the budget details, 27.95 per cent of the total allocation to the Ministry of Defence has been earmarked for capital expenditure. Revenue expenditure on sustenance and operational preparedness accounts for 20.17%, while 26.40% has been allocated towards pay and allowances. Defence pensions constitute 21.84% of the total outlay, and 3.64% has been set aside for civil organisations under the Ministry of Defence.

The government has enhanced funding for key strategic and welfare initiatives. Allocation to the Border Roads Organisation (BRO) under the capital head for BE 2026–27 has been increased to Rs 7,394 crore, up from Rs 7,146.50 crore in FY 2025–26, underscoring the focus on border infrastructure.

The Ex-Servicemen Contributory Health Scheme (ECHS) has been allotted Rs 12,100 crore, marking a significant 45.49% increase over the previous year, aimed at strengthening healthcare support for veterans.

In a boost to defence research and innovation, the budgetary allocation to the Defence Research and Development Organisation (DRDO) has been raised to Rs 29,100.25 crore in FY 2026–27 from Rs 26,816.82 crore in FY 2025–26.

Meanwhile, total budgetary allocation for Defence Pensions stands at Rs 1,71,338.22 crore, representing a 6.56 per cent increase compared to the allocation made at the BE stage in 2025–26.