Def Ministry achieves 100% capital spend for second consecutive year
New Delhi: With the fiscal year ending on March 31, the defence ministry announced on Wednesday that it has fully utilised its capital outlay (money spent to purchase or improve long-term assets) of Rs 1.86 lakh crore for defence services in the fiscal year 2025-26 at the Revised Estimates (RE) stage.
The ministry also claimed that it recorded a similar full utilisation in FY 2024-25. Overall, the total defence budget utilisation, including expenditure on MoD (Civil), pensions and other components, stood at 99.62 per cent of the final allocation for FY26.
The ministry officials said that a substantial share of the capital expenditure was directed towards the acquisition of aircraft and aero engines, including investments in land systems, electronic warfare equipment, armaments, shipbuilding, aviation stores and projectiles.
The capital expenditure, originally budgeted at Rs 1.80 lakh crore, was subsequently enhanced by the Ministry of Finance. The higher estimate was based on the fact that spending picked up speed in the first half of the fiscal year and the armed forces needed more money to modernise and be ready for action, especially post Operation Sindoor.
Also, procurements are expected to greatly improve the armed forces' ability to carry out their duties. Beyond military modernisation, the effective utilisation of the expenditure is also expected to help build infrastructure in border areas, which will improve strategic connectivity and readiness. The spending will probably have a bigger effect on the economy as a whole, since it will lead to more capital formation and job creation through its multiplier effect.
In FY26, the defence ministry gave Acceptance of Necessity (AoN) to 109 proposals worth Rs 6.81 lakh crore. This was a big increase from the previous financial year, when they only accepted 56 proposals worth Rs 1.76 lakh crore. Also, contracts for capital procurement for 503 proposals worth Rs 2.28 lakh crore were signed during the year.
The government has made its commitment to modernising the military even stronger going forward. The capital budget for the Ministry of Defence has gone up by 22 per cent to Rs 2.19 lakh crore for the fiscal year 2026–27, according to the Budget Estimates (BE) stage.
The increased funding is expected to speed up ongoing modernisation efforts and make India's military more ready for new security threats.
