The pension outlay for armed forces personnel, which forms a significant chunk of the annual defence budget, has seen a marginal increase of 1.27 per cent for the 2026-27 financial year over the current fiscal.

In her Budget, Finance Minister Nirmala Sitharaman has proposed an allocation of Rs 1,71,338.22 crore for pensions and other retirement benefits for the three services. The revised estimate for the 2025-26 fiscal was Rs 1,69,186.50 crore, whereas the actual expenditure for the 2024-25 fiscal was Rs 1,57,653.65 crore, according to data in the budget documents.

According to government data shared with Parliament in 2025, there are about 28 lakh registered ex-servicemen in the country. The figure includes about 24 lakh from the Army, 2.26 lakh from the Air Force and 1.5 lakh from the Navy. In addition, there are pensioners residing in Nepal who have served in the Indian armed forces.

Uttar Pradesh has the highest number of ex-servicemen among all states and union territories in the country, followed by Punjab and Rajasthan. Other states having a relatively higher population of ex-servicemen are Maharashtra, Kerala, Haryana, Himachal Pradesh, Bihar, Uttarakhand and Tamil Nadu.

The allocation for the Ex-servicemen Contributory Heath Scheme (ECHS), which has in the past come under fire for inadequate budgetary support, has also been enhanced. With a clientele base of 55 lakh beneficiaries, the scheme provides cashless medical cover facilities to ex-servicemen and their dependants through a network of 450 polyclinics and about 2,700 empanelled hospitals, diagnostic facilities and clinical laboratories.The ECHS revenue expenditure for 2026-27 has been proposed at Rs 12,100 crore compared to the revised estimates of Rs 11,000 crore for 2025-26 and the actual expenditure of Rs 10,914.78 crore for 2024-25. The capital expenditure for 2026-27 has been proposed at Rs 60 crore against the revised estimate of Rs 50 crore for 2025-26 and the actual expenditure of Rs 14.42 crore for 2024-25.

The capital expenditure is meant for creating assets like buildings and equipment for the long term while the revenue expenditure covers daily operating costs like salaries, utilities and miscellaneous expenditure.