'Budget not a constraint, procurement speed is': Defence Secretary as calls grow to double outlay to 4% of GDP
Former Lt Gen HS Panag recently wrote that India needs to double its defence budget to 4 per cent of the GDP to maintain strategic superiority against Pakistan and deter China
- Jun 23, 2025,
- Updated Jun 23, 2025 2:19 PM IST
After Operation Sindoor, some experts have demanded that the defence budget should be increased from the current 2 per cent to 4 per cent of the GDP. However, Defence Secretary Rajesh Kumar Singh has said the budget is not a problem. Bigger constraint so far, he said, was procurement speed. He also informed that the country fully utilised its revised capital outlay for defence modernisation this year - the first time in five years.
"In the last 10 years, our (modernisation or the capital) budget has been growing at a rate of about 7%. The difficulty has been in terms of absorbing some of that outlays," he said while speaking to ANI Podcast. "In many years, we've ended up surrendering money. This year we actually fully utilised our revised estimate. But at RE (revised estimate) stage, we did have some reduction because the trend in expenditure was not adequate."
Nonetheless, he added, for the first time in the last five years, the ministry actually fully utilised its revised estimates at least. "More importantly, we signed contracts worth two lakh crores this year, which is double what has ever been done any time earlier. The highest that was ever achieved earlier was about 1 lakh crores in 2023-24. So unless you speed up procurements, unless you do the contract signings, then get after the vendors to ensure that those contracts are fulfilled, unless you complete those steps — your absorptive capacity itself is a bigger constraint than the budgetary constraint."
"Now that we've fully utilised RE last year, we can ask for a higher share this year," the Defence Secretary said. "This year, given the pace of our current level of expenditure, we've already reached about 15% expenditure this year. So hopefully there will not be any cut. I'm very confident that there will not be any cut at the RE stage."
When asked whether there would be any increase in the defence budget, the secretary said resources will not be a problem. "Emergency procurement will hopefully take care of about 15% of the overall allocation this year. That combined with the stepped-up pace of current expenditure, we expect the existing BE (budget estimate) to be fully protected at the RE stage. If we feel that there are additional requirements, Ministry of Finance has always made it clear that on capex there is no constraint — they will give us whatever we need."
"So resources will not be a problem. I think on the procurement side, in terms of speeding up processes, that is probably the single most important thing that the Defence Secretary should be doing. That is my main priority in any case, and which is why I mentioned the contract signings last year. So if we are able to sustain those speeds, then automatically your utilisation will be ensured, because a lot of your budget will go into these committed liabilities from the previous year's contracts."
The Defence Secretary's comments came weeks after former Lt Gen HS Panag wrote that India needs to double its defence budget to 4 per cent of the GDP to maintain strategic superiority against Pakistan and deter China. In an opinion piece in The Print, he said, "The transformation of the armed forces is an inescapable necessity to establish an overwhelming technological military edge over Pakistan and to stalemate China, that too for a conflict when both adversaries are in collusion. And for this transformation to happen, we need to first double our defence budget to 4 per cent of the GDP."
India's current defence budget stands at Rs 6.81 lakh crore for FY2025–26 — a 9.53% increase from the previous year — but still remains below 2.5% of GDP. According to the Ministry of Defence, Rs 1.8 lakh crore (26.43%) of the total allocation will go to capital outlay, while rs 3.11 lakh crore (45.76%) will fund revenue expenditure. Pensions will account for Rs 1.6 lakh crore and the remainder will support civil organisations under the MoD.
India is among the world's top military spenders, but experts flag that its defence budget as a share of GDP is one of the lowest among major powers. The Standing Committee on Defence (2018) recommended that 3% of GDP should be earmarked to ensure preparedness — a benchmark India has yet to meet.
After Operation Sindoor, some experts have demanded that the defence budget should be increased from the current 2 per cent to 4 per cent of the GDP. However, Defence Secretary Rajesh Kumar Singh has said the budget is not a problem. Bigger constraint so far, he said, was procurement speed. He also informed that the country fully utilised its revised capital outlay for defence modernisation this year - the first time in five years.
"In the last 10 years, our (modernisation or the capital) budget has been growing at a rate of about 7%. The difficulty has been in terms of absorbing some of that outlays," he said while speaking to ANI Podcast. "In many years, we've ended up surrendering money. This year we actually fully utilised our revised estimate. But at RE (revised estimate) stage, we did have some reduction because the trend in expenditure was not adequate."
Nonetheless, he added, for the first time in the last five years, the ministry actually fully utilised its revised estimates at least. "More importantly, we signed contracts worth two lakh crores this year, which is double what has ever been done any time earlier. The highest that was ever achieved earlier was about 1 lakh crores in 2023-24. So unless you speed up procurements, unless you do the contract signings, then get after the vendors to ensure that those contracts are fulfilled, unless you complete those steps — your absorptive capacity itself is a bigger constraint than the budgetary constraint."
"Now that we've fully utilised RE last year, we can ask for a higher share this year," the Defence Secretary said. "This year, given the pace of our current level of expenditure, we've already reached about 15% expenditure this year. So hopefully there will not be any cut. I'm very confident that there will not be any cut at the RE stage."
When asked whether there would be any increase in the defence budget, the secretary said resources will not be a problem. "Emergency procurement will hopefully take care of about 15% of the overall allocation this year. That combined with the stepped-up pace of current expenditure, we expect the existing BE (budget estimate) to be fully protected at the RE stage. If we feel that there are additional requirements, Ministry of Finance has always made it clear that on capex there is no constraint — they will give us whatever we need."
"So resources will not be a problem. I think on the procurement side, in terms of speeding up processes, that is probably the single most important thing that the Defence Secretary should be doing. That is my main priority in any case, and which is why I mentioned the contract signings last year. So if we are able to sustain those speeds, then automatically your utilisation will be ensured, because a lot of your budget will go into these committed liabilities from the previous year's contracts."
The Defence Secretary's comments came weeks after former Lt Gen HS Panag wrote that India needs to double its defence budget to 4 per cent of the GDP to maintain strategic superiority against Pakistan and deter China. In an opinion piece in The Print, he said, "The transformation of the armed forces is an inescapable necessity to establish an overwhelming technological military edge over Pakistan and to stalemate China, that too for a conflict when both adversaries are in collusion. And for this transformation to happen, we need to first double our defence budget to 4 per cent of the GDP."
India's current defence budget stands at Rs 6.81 lakh crore for FY2025–26 — a 9.53% increase from the previous year — but still remains below 2.5% of GDP. According to the Ministry of Defence, Rs 1.8 lakh crore (26.43%) of the total allocation will go to capital outlay, while rs 3.11 lakh crore (45.76%) will fund revenue expenditure. Pensions will account for Rs 1.6 lakh crore and the remainder will support civil organisations under the MoD.
India is among the world's top military spenders, but experts flag that its defence budget as a share of GDP is one of the lowest among major powers. The Standing Committee on Defence (2018) recommended that 3% of GDP should be earmarked to ensure preparedness — a benchmark India has yet to meet.