Defence Budget 2025 highlights & announcements: Govt allocates Rs 6.81 lakh crore to defence, over 9% increase from last year

NEW DELHI: Finance minister Nirmala Sitharaman in the Union Budget for 2025 allocated Rs 6.81 lakh crore to the defence sector, marking a major increase from the Rs 6.2 lakh crore assigned in the current fiscal year.
Of the total allocation, Rs 4.88 lakh crore has been earmarked for revenue expenditure, covering salaries, operational costs, and maintenance, while Rs 1.92 lakh crore has been designated for capital expenditure, which includes procurement of new equipment, modernisation, and infrastructure development. Defence pensions account for Rs 1.60 lakh crore of the total outlay.

Sitharaman, presenting her eighth consecutive Budget, talked about fiscal prudence while addressing key sectors, including defence. The government aims to bring down the fiscal deficit to 4.4% of GDP for the next financial year, from the current 4.8%. To bridge the gap, the Centre plans to raise Rs 11.54 lakh crore from the market.
Beyond defence, the Budget included significant measures for the middle class, agriculture, and rural development. Sitharaman announced a tax exemption on annual incomes up to Rs 12 lakh and restructuring of tax slabs. She also introduced six new schemes aimed at tackling unemployment and boosting crop productivity.
Under capital expenditure, Rs 48,614 crore has been allocated for aircraft and aero engines, while Rs 24,390 crore has been earmarked for the naval fleet. A total of Rs 63,099 crore has been set aside for other equipment. For the 2024-25 fiscal year, the government allocated Rs 6,21,940 crore for the defence budget, with the capital outlay set at Rs 1,72,000 crore.
Among key agricultural initiatives, the Prime Minister Dhan-Dhaanya Krishi Yojana will focus on improving productivity and post-harvest infrastructure in 100 districts. Additionally, a five-year mission will support cotton farmers, promoting high-yield and extra-long staple cotton varieties.
In the marine sector, a new framework will be introduced to enhance sustainable fishing, with special attention to the Andaman & Nicobar and Lakshadweep Islands. A national mission on high-yielding seeds will also be launched, ensuring research-driven advancements in agriculture.
Further support has been extended to Bihar’s makhana sector through the establishment of a dedicated board to improve production, processing, and marketing. The government has also increased the subsidised Kisan Credit Card loan limit from Rs 5 lakh to Rs 7 lakh, benefiting farmers, fishermen, and dairy producers.