Union Budget 2026: Defence Allocation Surges to Rs 7.85 Lakh Crore: Defence Update for NDA Exam Preparation (3/February/2026)
Hey there, future defenders! On February 1, 2026, Finance Minister Nirmala Sitharaman presented the Union Budget for 2026-27, and defence got a major spotlight. The total allocation for the Ministry of Defence stands at Rs 7.85 lakh crore (about US$85.7 billion), up by 15.18% from the previous year’s budget estimates of Rs 6.81 lakh crore. This makes defence the top-funded ministry, accounting for around 14.67% of the total central government expenditure and roughly 2% of India’s projected GDP for the year.
A key highlight is the capital outlay, which jumped 22% to Rs 2.19 lakh crore. This chunk is earmarked for modernizing the armed forces, with big spends on aircraft and aero engines (Rs 63,733 crore) and the naval fleet (Rs 25,023 crore). Revenue expenditure also rose to Rs 3.65 lakh crore, supporting day-to-day operations, sustenance, and logistics. Pensions are included in the overall figure, with Rs 1.71 lakh crore set aside.
This budget comes in the wake of recent security operations like Operation Sindoor, emphasizing readiness against threats from neighbors. It pushes ‘Atmanirbhar Bharat’ by allocating 75% of capital funds (Rs 1.64 lakh crore) to Indian industries for indigenous production. Other boosts include a 15% rise in R&D funding and customs duty exemptions on imported components for aircraft manufacturing and MRO (Maintenance, Repair, and Overhaul) to cut costs and spur domestic growth. Overall, it’s a strategic move to enhance capabilities in air, land, sea, cyber, and space domains, aligning with India’s goal of Rs 3 lakh crore in indigenous defence production by 2029.
Key Points
- India’s Union Budget for 2026-27 has allocated Rs 7.85 lakh crore to defence, marking a significant 15% increase from the previous year, reflecting the government’s emphasis on military modernization amid evolving security challenges.
- Evidence suggests this boost prioritizes self-reliance, with nearly 75% of capital spending directed toward domestic procurement, helping build indigenous capabilities in a complex geopolitical landscape.
- The budget appears to balance operational needs and future readiness, though some experts note ongoing debates around whether allocations fully address pension burdens and rapid tech advancements.
- For NDA aspirants, staying informed on such developments can enhance preparation, as they often feature in exams and interviews, underscoring the importance of current affairs without favoring any particular viewpoint.
India’s Union Budget for 2026-27, presented on February 1, 2026, by Finance Minister Nirmala Sitharaman, places a strong emphasis on defence amid a shifting global security landscape, including recent events like Operation Sindoor—a military operation that highlighted the need for enhanced preparedness against regional threats. The Ministry of Defence (MoD) has received the highest allocation among all ministries, with a total budget of Rs 7.84 lakh crore (approximately US$85.7 billion), reflecting a 15.18% increase over the FY 2025-26 Budget Estimates (BE) of Rs 6.81 lakh crore. This allocation constitutes about 14.67% of the total Union Budget and around 2% of the projected GDP for 2026-27, underscoring the government’s commitment to national security without compromising fiscal discipline.
Excluding pensions, the effective defence budget stands at Rs 6.13 lakh crore (US$67.03 billion), balancing capital investments for long-term capabilities with revenue needs for immediate operational readiness. The capital outlay, crucial for acquiring new weapons and infrastructure, has surged by approximately 22% (or 21.83% in INR terms) to Rs 2.19 lakh crore (US$23.9 billion) from the previous year’s BE. This represents 27.95% of the MoD’s allocation and includes targeted spending on high-priority areas. For instance, nearly two-thirds of the capital budget is directed toward aircraft, aero engines, and other equipment, signaling progress on major programs like the Multi Role Fighter Aircraft (MRFA), Airborne Early Warning and Control (AEW&C) systems, and Medium Transport Aircraft.
Revenue expenditure has also seen a robust increase of about 17% (or 17.24% in INR terms) to Rs 3.65 lakh crore (US$39.9 billion), supporting troop sustenance, logistics, and operational preparedness. Within this, Rs 88,053 crore (US$9.62 billion) is allocated for stores, repairs, and works, elevating the total modernization envelope to Rs 3.07 lakh crore (US$33.55 billion). Pensions, a significant component, are pegged at Rs 1.71 lakh crore, integrated into the broader revenue framework. Service-wise breakdowns show varied growth: the Army’s revenue expenditure increased by 17.2%, the Navy’s by 22.7%, and the Air Force’s by 17.6% over the prior BE.
A cornerstone of this budget is the push for self-reliance under the ‘Atmanirbhar Bharat’ initiative. Approximately 75% of the capital outlay—Rs 1.64 lakh crore (US$17.89 billion)—is reserved for domestic procurement, bolstering indigenous defence production, which has already reached Rs 1.54 lakh crore (US$16.8 billion). The government aims to scale this to Rs 3 lakh crore (US$32.72 billion) in production and Rs 50,000 crore (US$5.45 billion) in exports by 2029, guided by the Technology Perspective and Capability Roadmap (TPCR) 2025, which outlines 457 products across multiple domains including cyber and space.
Research and Development (R&D) receives a steady 15% boost, with a total defence R&D budget increase and 25% of it (Rs 4,312 crore) dedicated to industry, startups, and academia. Specific allocations highlight strategic priorities: a 31% rise for aircraft and aero engines (Rs 63,733 crore), a 30.3% increase for other equipment like electronic warfare systems, loitering munitions, radars, and missiles, and a 25.5% hike for vehicles (Rs 4,580 crore) to improve mobility and logistics. The naval fleet gets Rs 25,023 crore, supporting submarines and warships.
Policy measures further support this ecosystem, including Basic Customs Duty (BCD) exemptions on imported components for aircraft parts manufacturing (extended to all manufacturers) and dedicated exemptions for Defence PSUs on raw materials for MRO activities, effective from February 2, 2026. These exemptions, valid until March 31, 2028, aim to reduce input costs, foster a competitive domestic value chain, and comply with IGCR Rules and DGCA approvals.
The budget also accommodates schemes like Agnipath, with a 51% allocation increase, and enables emergency procurements for arms and ammunition post-Operation Sindoor. While this allocation is assertive in addressing immediate threats from adversaries like Pakistan and China, it navigates debates on fiscal constraints, with some analysts suggesting the 2% GDP share could be higher to match global peers, though it remains pragmatic given economic priorities. Overall, this budget lays a foundation for a technologically advanced, self-reliant force, aligning with the vision of Viksit Bharat by 2047.
Defence Budget Breakdown Table
| Category | Allocation (Rs Lakh Crore) | % Increase over FY 2025-26 BE | Key Focus Areas |
|---|---|---|---|
| Total Defence Budget | 7.85 | 15.18% | Modernization, self-reliance, operational readiness |
| Capital Outlay | 2.19 | 21.83% | Aircraft (Rs 63,733 crore), Naval Fleet (Rs 25,023 crore), Other Equipment (30.3% increase) |
| Revenue Expenditure | 3.65 | 17.24% | Stores/Repairs (Rs 88,053 crore), Pay/Allowances (26.40% of revenue) |
| Pensions | 1.71 | N/A | Integrated into revenue |
| R&D (Total) | ~15% rise overall | 15% (revenue), variable capital | 25% for industry/startups (Rs 4,312 crore) |
| Indigenous Procurement | 1.64 (75% of capital) | Aligned with Atmanirbhar | Production target: Rs 3 lakh crore by 2029 |
Service-Wise Revenue Expenditure Increases
| Service | % Increase over FY 2025-26 BE |
|---|---|
| Army | 17.2% |
| Navy | 22.7% |
| Air Force | 17.6% |
This comprehensive approach not only addresses current security imperatives but also fosters long-term resilience, making it a pivotal development for defence stakeholders, including aspirants preparing for exams like NDA, where understanding budget dynamics can provide a competitive edge in General Knowledge, Current Affairs, and interview discussions on national policies.
NDA Exam Relevance for Union Budget
This news is gold for NDA preparation! It ties directly into General Knowledge and Current Affairs sections of the written exam, where questions on defence budgets, allocations, and policies often pop up. In SSB interviews, discussing implications—like how the capex hike boosts self-reliance or addresses border tensions—shows your awareness of national security. Use it to prep for debates on military modernization.
Practice Questions
1) What is the total defence allocation in India’s Union Budget 2026-27?
a) Rs 6.81 lakh crore
b) Rs 7.85 lakh crore
c) Rs 2.19 lakh crore
d) Rs 3.65 lakh crore
(Answer: b)
2) By what percentage did the capital outlay for defence increase in the 2026-27 budget compared to the previous year’s estimates?
a) 15%
b) 22%
c) 17%
d) 31%
(Answer: b)
Keep grinding, aspirants—staying updated on defence news like this is key to cracking the NDA exam. For expert guidance on NDA preparation and real-time strategies, check out Ground Zero Defence Academy, the best NDA coaching in Dehradun. They specialize in how to crack NDA exam with tailored current affairs sessions!