In a marginal hike, the defence budget was increased to Rs 3.37 trillion for 2020-21 against last year's Rs 3.18 trillion, notwithstanding expectations of a significantly higher allocation to fast-track long-pending military modernisation.
The allocation compared to last year's budget estimate of Rs 3.18 trillion is an increase of 5.63 per cent but it comes to around 1.8 per cent if calculated against the revised estimate of 3.31 trillion for 2019-20.
Out of total allocation, Rs 1.13 trillion has been set aside for capital outlay to purchase new weapons, aircraft, warships and other military hardware, according to the Union Budget presented in Lok Sabha by Finance Minister Nirmala Sitharaman.
The revenue expenditure which includes expenses on payment of salaries and maintenance of establishments has been pegged at Rs 2.09 trillion.
The size of defence budget stands at Rs 4.71 trillion if a separate allocation of Rs 1.33 trillion set aside for payment of pensions is taken into account.
The three services have been pressing for higher allocations to carry forward their long-pending modernisation plans and go for big ticket acquisitions in view of fast changing security matrix in the region including China further boosting its military might.
The expectations for higher allocation rose after last year's Balakot strikes.
Military experts said though the allocation was inadequate in view of the demands of the three forces, the outlay was satisfactory considering the state of the country's economy.
"Money given to the armed forces is not enough. But, at the same time, we have to consider the condition of the Indian economy. The important point will be how the resources allocated to the military are utilised," said Dr Laxman Behera of Institute of Defence Studies and Analysis.
The capital outlay of Rs 1,13,734 crore is an increase of Rs 10,340 crore as against last year's budget estimate of 1,03,394 crore.
The revenue expenditure which includes expenses on account of salaries and maintenance of establishments has been pegged at Rs 2,09,319 crore as against Rs 2,01,901 crore in 2019-20.
The percentage of the allocation of Rs 3.37 trillion compared to India's GDP has almost remained static at around 1.5 per cent, which is the lowest since the 1962 war with China.