The union finance minister Arun Jaitley today proposed a year-on-year increase of 6.2 per cent in defence outlay at Rs2,74,000 crore.
This accounts for about 12.76 per cent of the total government expenditure of Rs21.47 lakh crore. However, the hike in allocation is down from the 11 per cent proposed in last year's budget.
Jaitley said the money allocated for defence expenditure, excluding pension expenditure, is Rs 2,74,114 crore, adding this would include Rs86,488 crore of capital expenditure.
Excluding the pension outlay, the total defence budget for 2016-17 was Rs2, 49,000 crore.
When taken without the pension component, the outlay for the coming year shows a 9.14 per cent increase over 2016-17.
At 1.62 per cent, India's defence spending is very low when measured against the country's gross domestic product.
However, minister of state for defence Subhash Bhamre hailed the hike in outlay. ''9.3% increase in capital outlay for defence ministry. Up to Rs86,000 cr from Rs78,000 cr last year. Welcome move,'' he tweeted.
The government also announced a centralised travel system for soldiers through which tickets could be booked online. ''They (soldiers) do not have to face the hassle of standing in queues,'' Jaitley said.
It has also announced the creation of a web-based pension distribution system for the defence personnel .