Union Budget: MoD Receives Over Rs 6.81 Lakh Crore, Defence Pension Rises by 14%

New Delhi, Feb 1 (NationPress) The Union government has allocated over Rs 6.81 lakh crore to the Ministry of Defence (MoD) on Saturday, alongside a 14 percent increase in the defence pension.

An official from the MoD stated that in line with Prime Minister Narendra Modi’s vision of ‘Viksit Bharat @ 2047’, which emphasizes technologically advanced and ‘Aatmanirbhar’ Armed Forces, the Union Budget has set aside Rs 6,81,210.27 crore for the Financial Year (FY) 2025-26 for the MoD.

“This allocation marks a 9.53 percent increase compared to the Budgetary Estimate for FY 2024-25 and represents 13.45 percent of the Union Budget, the highest among all ministries,” the official elaborated.

Of this amount, Rs 1,80,000 crore (26.43 percent of the total allocation) is earmarked for Capital Outlay on Defence Services.

“The allocation for the Armed Forces under the Revenue Head is Rs 3,11,732.30 crore, accounting for 45.76 percent of the total allocation. The Defence Pension receives Rs 1,60,795 crore (23.60 percent), while Rs 28,682.97 crore (4.21 percent) is allocated for civil organizations under the MoD. The Ministry has declared FY 2025-26 as the ‘Year of Reforms’, aimed at bolstering the government’s commitment to modernizing the Armed Forces and simplifying the Defence Procurement Procedure for optimal allocation utilization,” he added.

During a media briefing in New Delhi, Defence Minister Rajnath Singh praised Finance Minister Nirmala Sitharaman for presenting a budget that aligns with the Prime Minister’s vision of Viksit Bharat.

“This budget aims to uplift the development of youth, the underprivileged, farmers, women, and all other societal segments. Acknowledging the middle class's contributions, this budget is an unprecedented boon,” noted the Defence Minister.

In the meantime, the official mentioned that Rs 1,80,000 crore has been designated for the Capital Outlay of the Defence Forces.

“This allocation signifies a 4.65 percent increase over the Budgetary Estimate (BE) of FY 2024-25,” said the official.

Furthermore, Rs 1,48,722.80 crore is intended for Capital Acquisition, defined as the modernization budget for the Armed Forces, while the remaining Rs 31,277.20 crore is allocated for capital expenditures on Research & Development and infrastructure development nationwide.

The ministry indicated that for FY 2025-26, Rs 1,11,544.83 crore (75 percent of the modernization budget) is set aside for procurement through domestic sources, with 25 percent of the domestic share (i.e., Rs 27,886.21 crore) allocated for procurement from domestic private industries.

Additionally, Rs 3,11,732.30 crore is allocated for this purpose, representing a 10.24 percent rise over the budgetary allocation of FY 2024-25.

“Of this, Rs 1,14,415.50 crore is designated for non-salary expenditures, facilitating the procurement of rations, fuel, ordnance supplies, and equipment maintenance/repair,” he explained.

The ministry also stated that for the Salary Head of revenue expenditure, Rs 1,97,317.30 crore has been allocated to cover the Pay & Allowances of the three services, with any additional needs to be addressed during the mid-year review.

Furthermore, the budget allocation to the Defence Research and Development Organisation (DRDO) has been raised to Rs 26,816.82 crore for FY 2025-26, up from Rs 23,855.61 crore in FY 2024-25, marking a 12.41 percent increase over the BE for 2024-25.

“Of this, a significant share of Rs 14,923.82 crore is allocated for capital expenditures and funding R&D projects,” it stated.

To foster a start-up ecosystem for defence innovation, Rs 449.62 crore has been earmarked for the iDEX scheme, including its sub-scheme Acing Development of Innovative Technologies with iDEX (ADITI), to support projects under this initiative.

The ministry highlighted that this allocation reflects a near threefold increase over two years.

Additionally, the ministry shared details about the government’s commitment to ex-servicemen welfare, with Rs 8,317 crore allocated for ECHS, representing a 19.38 percent increase over the BE for FY 2024-25.

“During the mid-year review of the current FY, additional allocations were made to address urgent medical treatment expenditures,” the ministry mentioned.

The ministry noted that there are approximately 34 lakh defence pensioners whose monthly pensions are funded from the Defence Pension Budget.

“To further enhance Defence Pension for the Armed Forces, One Rank One Pension (OROP) was implemented effective July 2014. Since then, it undergoes revision every five years. The third revision under OROP will take effect from July 2024, and it has been timely executed,” the ministry stated.

It added that considering the elements of expenditure under Defence Pension, Rs 1.61 lakh crore has been allocated for FY 2025-26, which reflects a 13.87 percent increase compared to FY 2024-25.

The ministry also disclosed that the Indian Coast Guard (ICG) has been allocated Rs 9,676.70 crore under both Capital and Revenue Heads, marking a 26.50 percent increase over the FY 2024-25 at the BE stage.

“A significant 43 percent jump in the Capital Budget, from Rs 3,500 crore for FY 2024-25 to Rs 5,000 crore for FY 2025-26, will provide adequate funds for acquiring Advanced Light Helicopters (ALH), Dornier Aircraft, Fast Patrol Vessels (FPVs), Training Ships, Interceptor Boats, etc. On the revenue side, the allocation has increased from Rs 4,151.8 crore for FY 2024-25 to Rs 4,676.70 crore for FY 2025-26, reflecting a 12.64 percent increase,” the ministry stated.

To enhance border infrastructure and facilitate the movement of Armed Forces personnel through challenging terrains, Rs 7,146.50 crore has been allocated to the Border Roads Organisation (BRO) under the capital head, showing a 9.74 percent increase compared to the BE of 2024-25.