Defence spending rises, but not its share in GDP

In recent years, the decline in defence expenditure as a proportion of gross domestic product (GDP) has often been justified by pointing to the sharp rise in absolute allocations. Since the National Democratic Alliance government led by Prime Minister Narendra Modi assumed office in 2014, the defence budget has more than tripled. 

The Ministry of Defence’s (MoD’s) overall budgetary allocation rose to ₹6.81 trillion in financial year (FY) 2025-26 from ₹2.18 trillion in FY 2014-15. However, as a share of GDP and central government expenditure (CGE), the FY 2025-26 defence budget stood at 1.91 per cent and 13.45 per cent, respectively, compared with 2.08 per cent and 13.15 per cent in FY 2014-15. That said, the downward trend has not been uniform. Between FY 2016-17 and FY 2018-19, defence spending consistently exceeded 2 per cent of GDP and 17 per cent of CGE. Another notable exception was FY 2020-21, when defence expenditure rose to 2.45 per cent of GDP, even as its share of CGE declined to 13.84 per cent.