Defence Pensions Outlay Up 1.27% in Budget 2026–27

February 1, 2026

The outlay for defence pensions in the Union Budget 2026–27 has been raised by a marginal 1.27 per cent compared with the previous fiscal year, reflecting a slight increase in government expenditure to support retired armed forces personnel. This pension component, which forms a significant part of the overall defence budget, was increased even as the total defence outlay saw a substantial rise for the coming year.

According to budget documents, the revised estimate for defence pensions in 2025–26 was Rs 1,69,186.50 crore, compared to the actual expenditure of Rs 1,57,653.65 crore for 2024–25. The new allocation shows only a modest uptick despite broader increases in defence spending.

Defence Pensioners and Demographics

Government data shared with Parliament in 2025 shows there are around 28 lakh registered ex-servicemen across India including approximately 24 lakhs from the Army, 2.26 lakh from the Air Force, and 1.5 lakh from the Navy — who are beneficiaries of these pensions. Some pensioners also reside outside India, including in neighbouring Nepal.

Among Indian states and Union Territories, Uttar Pradesh has the highest number of ex-servicemen, followed by Punjab and Rajasthan. Other states with considerable veteran populations include Maharashtra, Kerala, Haryana, Himachal Pradesh, Bihar, Uttarakhand and Tamil Nadu.

Healthcare Support for Veterans Also Boosted

Alongside the increase in pension outlays, the Budget also enhanced funding for the Ex-Servicemen Contributory Health Scheme (ECHS), which provides cashless medical coverage to retired personnel and their dependents. The scheme serves around 55 lakh beneficiaries through a network of 450 polyclinics and roughly 2,700 empanelled hospitals, diagnostics facilities and labs.

For the 2026–27 fiscal year, the ECHS revenue expenditure has been proposed at Rs 12,100 crore, up from the Rs 11,000 crore revised estimates for 2025–26 and Rs 10,914.78 crore in 2024–25. The capital expenditure component has also been increased to Rs 60 crore from Rs 50 crore in the previous fiscal.

Context: Defence Budget Growth and Pensions

The slight increase in defence pension outlay stands against a backdrop of a much larger defence budget for the next year, which has been set at around Rs 7.84 lakh crore a significant boost over the previous year’s allocation. This larger budget emphasizes military modernization, acquisitions, and strategic infrastructure, while pensions remain a stable, recurring expenditure.

While pensions are essential to ensure the well-being of veterans and their families, analysts note that the modest growth in pension outlays reflects the government’s attempt to balance fiscal priorities with expanding defence requirements in capital investment and modernization.