Defence Ministry Achieves Full Capital Budget Utilization for FY2025-26
The defence ministry has successfully utilized its entire capital outlay of Rs 1.86 lakh crore, as per the revised estimate for the financial year 2025-26. This marks a continuation of the ministry's efficient financial management, as it had also fully utilized its capital budget in the preceding fiscal year, FY2024-25.
Overall Budget Utilization and Revised Estimates
The overall utilization of the defence budget, which includes the Ministry of Defence (civil) and pension components, reached an impressive 99.62 per cent during FY2025-26. Initially, the original appropriation for capital expenditure was set at Rs 1.8 lakh crore. However, the finance ministry increased this amount due to the rapid pace of expenditure observed in the first two quarters of the fiscal year. This adjustment was made in response to the heightened requirements of the armed forces for modernisation and other operational needs following Operation Sindoor, as detailed in an official ministry release.
Key Areas of Expenditure
A substantial portion of the capital expenditure was directed towards the acquisition of aircraft and aero engines. Other major spending categories included:
- Land systems
- Electronic warfare equipment
- Armaments
- Shipbuilding
- Aviation stores
- Projectiles
Notably, the expenditure also encompassed proposals for critical defence acquisitions, such as:
- Multi-role fighter aircraft
- Medium-altitude long-endurance remotely piloted aircraft for the Indian Air Force
- Mine counter measure vessels for the Navy
- Quick-reaction surface-to-air missile system for the Army
- Nag missile system Mark-2 for the Army
Proposals and Procurement Contracts
In FY2025-26, the defence ministry granted acceptance of necessity for 109 proposals, with a total value of Rs 6.81 lakh crore. This represents a significant increase compared to the 56 proposals worth Rs 1.76 lakh crore approved in FY2024-25. Additionally, the ministry signed capital procurement contracts for 503 proposals amounting to Rs 2.28 lakh crore during the same period.
Future Budget Allocation
Looking ahead, the budget for FY2026-27 has allocated Rs 2.19 lakh crore under the capital head, reflecting a substantial 22 per cent hike. This increase underscores the government's continued commitment to enhancing defence capabilities and supporting the modernisation efforts of the armed forces.
