MC EXCLUSIVE Budget 2026: 7.84 lakh crore defence allocation prioritises fighter jets, CAPEX over salaries, says expert

Defence budget focuses on modernisation, not salaries

The bulk of India’s 7.84 lakh crore defence budget for 2026–27 is set to be directed towards modernisation and capital expenditure, rather than pensions and salaries, according to Maj. Gen. (Retd.) Dhruv Katoch.

Speaking to moneycontrol.com, Maj. Gen. Katoch highlighted that the increase in the defence budget is primarily intended to strengthen India’s military capabilities. “I think the major portion of this will really, will really cover the modernization aspect. This will go towards the CAPEX,” he said, referring to the capital expenditure allocation within the budget.

The defence budget has seen a substantial increase of around 1.04 lakh crore compared to the previous year, rising from 6.81 lakh crore to 7.85 lakh crore. Of this, Maj. Gen. Katoch expects a significant portion to be earmarked for the procurement of advanced fighter aircraft. “I have a feeling that a percentage of this will go to the purchase of fighter aircraft, possibly the first tranche of Rafale or some other aircraft or the Su-57 or whichever one India is going to get. The first tranche which we get next year, a portion of this will go for that. So capital outlay has grown to 2.19 lakh crore,” he said, highlighting the focus on modern air power capabilities.

Maj. Gen. Katoch emphasised that pensions and salaries are not the primary drivers of the budget increase. “Major portion of this will really cover the modernization aspect,” he reiterated, underlining that India is prioritising defence readiness and technological advancement over routine expenditures.

He also stressed that defence procurement is a long-term process, and the annual budget is just one component of a sustained, multi-year plan. “There is no way in which India can buy all that we need within this financial year. So this purchasing system I think is going to carry on, in my view, over the next five to 10 years. That is the time period,” Maj. Gen. Katoch said, noting that planning over five- to ten-year horizons is crucial to meeting the armed forces’ evolving requirements.

The retired general added that the current budget lays the foundation for long-term investment in India’s defence industrial base and modernisation. “Whatever we can do for this financial year, that has been budgeted for. And these are still the BEs. This is the budget estimates. If more is required, I’m quite confident that in the revised estimates, that additional amount will also be given,” he said.

Maj. Gen. Katoch also indicated that India is increasingly focusing on enhancing domestic defence production alongside procurement. The budget supports investments in advanced weapon systems, aerospace platforms, and naval capabilities, signalling a shift toward greater self-reliance in defence manufacturing.

With this approach, the 2026–27 defence budget not only addresses immediate capital needs but also strengthens India’s preparedness for modern warfare, integrating technology, advanced aircraft, and long-term industrial development to ensure a robust and future-ready military posture.