In FY 2025-26, the Ministry of Defence reported a major update on both defence-services capital-budget utilisation and defence procurement. The Ministry fully utilised the Rs 1.86 lakh crore capital outlay for Defence Services at the Revised Estimates stage. Overall defence-budget utilisation, including MoD civil expenditure and pensions, stood at 99.62% against the final allocation. The original appropriation for capital expenditure was Rs 1.80 lakh crore, later augmented by the Ministry of Finance because of the pace of spending in the first two quarters and the increased modernisation requirement after Operation Sindoor.
On the procurement side, MoD signed capital procurement contracts for 503 proposals amounting to Rs 2.28 lakh crore in FY 2025-26. In the same year, Acceptance of Necessity was accorded for 109 proposals amounting to Rs 6.81 lakh crore, compared with 56 proposals worth Rs 1.76 lakh crore in FY 2024-25. A significant part of expenditure went towards aircraft and aero engines, land systems, electronic warfare equipment, armaments, shipbuilding, aviation stores and projectiles.
For exam preparation, this update links defence modernisation with capital expenditure, budget management and the economic impact of national security spending. The capital expenditure is relevant not only for strengthening the Armed Forces but also for border-area infrastructure, capital formation and employment opportunities. For FY 2026-27, the Ministry has been allocated Rs 2.19 lakh crore under the capital head at the Budget Estimates stage, a 22% hike. This makes the update useful for prelims facts and for understanding the security-economy linkage.