India's Defense Budget: A Modest Increase

India's military modernization continues at a slow pace, with the defense budget for 2025-26 receiving a modest 9.5% increase over last fiscal's estimates. This brings the total defense outlay to Rs 6.8 lakh crore ($79 billion), which is only 1.9% of the projected GDP. Experts suggest that at least 2.5% of GDP is necessary to effectively counter the collusive threat from China and Pakistan.

Capital Expenditure and Revenue Outlay

The capital expenditure for military modernization, acquisitions, infrastructure assets, and R&D stands at Rs 1.8 lakh crore, marking a mere 4.6% increase from the previous fiscal year. Meanwhile, the revenue outlay for operational costs, sustenance, and salaries of the armed forces and defense civilians is almost double the capital expenditure, at Rs 3.1 lakh crore. Additionally, the pension bill for ex-servicemen and defense civilians has risen by 13.9% to Rs 1.6 lakh crore.

Unspent Funds and Future Implications

Despite the increase in budget, the defense ministry has returned Rs 12,500 crore as unspent funds under the capital expenditure head. This raises questions about the efficiency of fund utilization and the ability of India's defense sector to modernize and prepare against the growing threats from its neighbors.