How Military Conflict Can Strain India’s Finances?

Military conflicts between neighbouring countries do more than shake borders — they rattle economies too. While full-blown war hasn't erupted, escalations under Operation Sindoor could stretch India's finances. In 1999, the Kargil war pushed the fiscal deficit to 5.2%. If tensions rise now, FY26 could see a similar strain — especially in defence spending. With defence budgets already rising to 7.6% in FY25, any further increase could derail the Centre’s fiscal roadmap. That might mean trimming the Rs 11.2 lakh crore capital expenditure plan, tolerating a slip in the 4.4% deficit target, or squeezing more from revenue — all under economic uncertainty. Watch Business Today TVs special explainer on this.