Agnipath 2.0 may ease recruitment pressures but weaken defence reform

Agnipath 2.0 may ease personnel shortages and retain trained soldiers, but higher pay and benefits risk adding to pension costs and squeezing funds for defence modernisation.

The Centre’s decision to modify the Agnipath scheme partially reverses the objective for which this recruitment programme for the defence forces was launched four years ago. Introduced following the government’s acceptance of the One Rank One Pension (OROP) scheme for the defence services in 2014, it sought to contain the burgeoning costs of personnel and pension owing to that decision. The original Agnipath scheme offered a four-year term of duty for soldiers below the rank of commissioned officers for all three services, bypassing traditional service benefits such as pension and rations. Those exiting the scheme after four years would be receiving a lump sum payment (Seva Nidhi) and support for future employment after discharge. The initial scheme provided for 25 per cent of Agniveers to be absorbed into the regular services on the basis of merit after the four-year term. An analysis by the Observer Research Foundation suggests that an Agniveer costs the government roughly ₹1.75 lakh less a year than a traditional soldier on standard pay bands. Under the new scheme, the 75 per cent of the Agniveers due to exit have been offered a two-year extension with a sharp pay increase of ₹43,500 and ₹47,500 in the two-year period with an option to enrol as regular soldiers at the end of two years based on their willingness to continue and merit. Those who exit after this two-year extension will benefit from an enhanced government contribution to the Seva Nidhi package from 50 per cent to 70 per cent.

 The new scheme seeks to address some immediate issues. First, it would retain combat-trained Agniveers for longer and save on training costs, which will partly offset enhanced outlays under the new scheme. Second, the extension retains Agniveers who would have exited in the ordinary course, partially addressing the problem of both rising youth unemployment and a shortfall in defence personnel following a two-year recruitment freeze during Covid. These are legitimate solutions but the enhanced pay and Seva Nidhi payouts are likely to impose long-term pressures on an already stretched defence budget. The government allocated ₹17,396 crore for the Agnipath scheme in the 2026-27 defence budget, a 58 per cent increase over 2025-26. The new scheme, thus, will add to the bill for salaries and pensions, which already accounts for 44 per cent of the defence budget this financial year, with pensions alone (₹1.71 trillion) accounting for 22 per cent.

 The enhanced spending on Agnipath 2.0 is also likely to crowd out defence capital expenditure, especially on modernisation, which is sorely needed to boost the defence forces’ capabilities. Upgrades are urgently needed across the defence services — fighter and transport aircraft, helicopters, warships, submarines and even basic artillery guns, apart from new-age missiles and advanced unmanned aerial vehicles. An unintended consequence of Agnipath 2.0 is also likely to be accentuated — the weakening of the traditional esprit de corps of the regimental system, which relies on shared identity. There is some anxiety that competition for four- and six-year slots could vitiate the camaraderie so essential to combat efficacy. Agnipath 1.0 was launched to address a defence budgetary issue. In seeking to address unanticipated short-term problems, Agnipath 2.0 is likely to weaken the original objective.