Union Budget boosts defence: But how does India compare to China and Pakistan?

The Union Budget has given a big boost to defence.

The Union Budget documents show that the Centre has allotted Rs 6.81 lakh crore for defence spending.

Finance Minister Nirmala Sitharaman, during the unveiling of the Union Budget 2025-2026 on Saturday,  did not mention the amount allocated to defence in her speech.

“This is an excellent Budget presented by Finance Minister Nirmala Sitharaman with an aim to fulfil PM Modi’s vision of ‘Viksit Bharat,’” Union Defence Minister Rajnath Singh said.

But what do we know about the allocation to defence? And how does it compare to other nations?

What do we know?

The Centre has earmarked Rs 6.81 lakh crore ($78 billion) for defence for the FY 2025-2026.

That figure was at Rs 6.2 lakh crore during the FY 2024-2025.

More from Explainers

Union Budget 2025: Govt to launch National Manufacturing Mission, ease access to credit to MSME & exporters Union Budget 2025: Govt to set up Centre of Excellence in AI

The Centre has increased its defence budget by 9.55 per cent compared to the budget estimate.

The figure is also six per cent more than last year’s revised estimates of Rs  6.41 lakh crore.

“This year’s defence budget of more than Rs 6.81 lakh crore is about 9.5 per cent more than last year’s budget allocation. Modernisation of the defence forces has been the priority of our government, and ₹1.8 lakh crore has been earmarked for this. It will help increase the capabilities of the armed forces,” Union Defence Minister Rajnath Singh said.

As per Mint, the government has allocated Rs 1.8 lakh crore for modernisation of the military.

This includes buying advanced fighter jets, naval vessels, and artillery systems.

Editor’s Picks

1

Union Budget 2025: From ID cards to healthcare, the benefits for gig workers 2

Should you choose new tax regime over old? All your questions on income tax answered

Of the Rs 1.8 lakh crore, Rs 1.48 lakh crore goes to capital acquisition.

The rest, Rs 31,277 crore research and development and creation of infrastructure across the country, the ministry said.

Hindustan Times quoted Singh as saying that 75 per cent of the funds spent on modernisation will go to domestic sources.

“The capital allocation is 4.65% higher than the budget estimates of FY 2024-25,” the defence ministry said.

“To encourage the private sector, a notable percentage of domestic share is further earmarked for acquisition from the private industries. For FY2025-26, Rs 1.11 lakh crore (75 per cent of the modernisation budget) has been earmarked for procurement through domestic sources and 25 per cent of the domestic share ( Rs 27,886.21 crore) has been provisioned for procurement through domestic private industries,” the statement from the defence ministry added.

The Budget has allocated Rs 7,146.50 crore for the Border Roads Organisation (BRO) – 9.74 per cent more than the previous budget.

The Defence Research and Development Organisation (DRDO) has been earmarked Rs 26,816.82 crore.

During the 2024-2025 Budget, the DRDO got Rs 23,855.61 crore.

That’s a 12.41 per cent increase.

“Of this, a major share — Rs 14,923.82 crore — has been allocated for capital expenditure and to fund R&D projects. This will financially strengthen the DRDO in developing new technologies with special focus on fundamental research,” the defence ministry said.

The Centre in the previous financial year also allocated 75 per cent of the funds for local sources.

However, the documents show Rs 12,500 crore of last year’s capital outlay remained unspent.

Capital outlay for FY 2025-2026 is estimated at Rs 1.92 lakh crore.

This includes a revenue expenditure – which covers daily operational costs such as salaries, maintenance of equipment, ammunition, and other consumables – of Rs 3.11 lakh crore.

The government will spend Rs 1.6 lakh crore on pensions.

That’s a 13.5 per cent increase from Rs 1.41 lakh crore in 2024–25.

As per Financial Express, Rs 8,317 crore has been set aside for the Ex-Servicemen Contributory Health Scheme (ECHS).

That’s a 19.38 per cent increase over the previous year’s Budget.

The Centre has also earmarked Rs 449.62 crore for the Innovations for Defence Excellence (iDEX scheme) – a nearly 300 per cent increase since 2023.

The Indian Coast Guard has been allotted Rs 5,000 crore – an increase of 43 per cent.

This will allow the coast guard to buy Advanced Light Helicopters (ALH), Dornier Aircraft, and Fast Patrol Vessels (FPVs).

Defence comprises 1.9 per cent of India’s projected gross domestic product (GDP) for 2024-25.

It takes up 13.45 per cent of the government’s budget, as per Mint.

How does it compare to other nations?

Indian Express quoted Swedish think-tank Stockholm International Peace Research Institute (Sipri) as saying that global military spending touched $2,443 billion in 2023-2024.

Nearly half of that came from just two countries – United States and China.

Washington and Beijing respectively spent $916 billion and $296 billion on their militaries respectively.

The US spent 3.4 per cent of its GDP on the military, while China spent 3.4 per cent of its GDP on the military.

However, some experts think China is vastly underreporting its spend on defence.

They say China could be spending as much as $711 billion on defence.

The Centre for Strategic and International Studies (CSIS) has stated that it thinks China’s military budget in 2002 could have been as much as four times as the number it officially released.

The US Department of Defence thinks China routinely underplays its budget by 1.1 to 2 times.

Russia, which came in third, spent around $109 billion on its military in the 2023-2024 quarter.

India in 2023 was the fourth-largest military spender with $83.6 billion.

The other countries that made the top 10 when it comes to spending are Saudi Arabia ($75.8 billion), the UK ($74.9 billion), Germany ($66.8 billion), Ukraine ($64.8 billion), France ($61.3 billion) and Japan ($50.32 billion).

Pakistan, meanwhile, lags far behind India and China.

Islamabad for the 2024-2025 fiscal year announced a defence budget of just $7.64 billion.

Still, that is a 14.5 per cent increase over the 2023-2024 budget and an 18 per cent increase over the original budget for that year.

Analysts say that while the capital outlay figure is 4.6 per cent more than the previous year, it needs to be higher still to meet India’s efforts to modernise its military to counter rival China.

“This has been a concern for a long time, that pensions (and) salaries put together… consume the major chunk of the defence budget, which continues to be the case,” Amit Cowshish, former financial adviser for acquisitions at the Defence Ministry, said.

With inputs from agencies