The Ministry of Defence (MoD) reported full utilisation of its capital outlay of Rs 1.86 tn for defence services for FY 2025-26 at the revised estimates stage, achieved through the joint efforts of MoD (Finance), the Acquisition Wing, the Defence Services and the Defence Accounts Department. The milestone follows complete utilisation in FY 2024-25. Overall utilisation including MoD civil expenditure and pension stood at 99.62 per cent.

The original appropriation for capital expenditure was Rs 1.80 tn, which the Ministry of Finance augmented in view of expenditure pace during the first two quarters and the increased requirements of the forces for modernisation following Operation Sindoor. The adjustment aimed to maintain continuity of critical acquisition programmes.

A significant portion of expenditure was directed to aircraft and aero engines, followed by land systems, electronic warfare equipment, armaments, ship building, aviation stores and projectiles. These investments underpinned capability enhancement and sustained supply chains for domestic and partner industry.

Effective utilisation of capital expenditure is expected to aid infrastructural development in border areas and support economic growth through its multiplier effect on capital formation and the generation of employment opportunities. Timely releases and contract awards contributed to local production and ancillary sector activity.

In FY 2025-26 the Ministry accorded Acceptance of Necessity (AoN) for 109 proposals amounting to Rs 6.81 tn, compared with 56 proposals worth Rs 1.76 tn in FY 2024-25. Capital procurement contracts for 503 proposals amounting to Rs 2.28 tn were signed in FY 2025-26.

Looking ahead, the Ministry has been allocated Rs 2.19 tn for FY 2026-27 under the capital head at the budget estimate stage, representing a hike of 22 per cent and intended to augment modernisation and strengthening of the armed forces. The ministry presented full utilisation in the current year as a marker of improved financial management and procurement momentum.