The revamped Agnipath recruitment model, which guarantees full-term military service to all Agniveers, will undergo a financial review, with higher salaries and future pension and gratuity payouts expected to increase the government's expenditure, top officials familiar with the matter said on Thursday.
Funding will not be a constraint, the officials added.
“The higher outgo is expected to be partly offset by savings in training costs. The Agnipath reset will eliminate the need for additional training, reducing costs and keeping expenditure in check. In any case, national security comes above fiscal considerations,” one of the officials said.
Deep Dive
Why will the revamped Agnipath scheme undergo a financial review?
How does the two-year Agniveer service extension work?
Does the Agniveer extension guarantee permanent service and a pension?
The financial implications will be reviewed periodically, a second official said.
The revamped scheme
The Centre approved the revamped scheme on Wednesday, giving Agniveers who fail to make the cut after the initial four-year service the option to continue in uniform for two more years with higher salaries. It also gives them a route to enrol as regular soldiers at the end of the extended period, making them eligible for a pension, gratuity, and other benefits, including medical and canteen facilities.
Essentially, all these Agniveers will become permanent after this two-year extended service, subject to meeting specific eligibility criteria and individual consent.
{{/usCountry}}Essentially, all these Agniveers will become permanent after this two-year extended service, subject to meeting specific eligibility criteria and individual consent.
{{/usCountry}}The move came weeks before the three services were set to release 75% of Agniveers from their first batch, retaining only the 25% selected on merit for another 15 years under the Agnipath scheme’s earlier provisions. Crucial assembly elections are scheduled early next year in five states, of which Uttar Pradesh, Uttarakhand and Punjab contribute substantial numbers to the forces.
CDS' view
Chief of Defence Staff General NS Raja Subramani said in a joint cabinet briefing with Union minister Ashwini Vaishnaw on Wednesday that the government’s focus is on boosting the armed forces’ operational efficiency, meeting organisational requirements, and fulfilling the aspirations of Agniveers.
"I want to say only one thing about the budget. As far as the Indian defence forces and the government are concerned, there has never been any shortage, and the primary aspect has been the operational efficiency and the ability of the armed forces to be fully ready at all times. There is no issue there,” he said.
Managing a burgeoning wages and pension bill was one of the defining features of the original scheme introduced in June 2022.
The government allocated ₹17,396 crore for the Agnipath scheme in the defence budget for 2026-27, marking a 58% jump over the budget estimate of ₹11,039 crore in the financial year 2025-26. The budget for the scheme across the three services stood at ₹7,471 crore in 2024-25.
The outlay for the Agnipath scheme comes under the revenue head. The army’s share in this year’s budget for the scheme is ₹15,173 crore, the navy’s ₹1,150 crore, and the air force’s ₹1,072 crore, budget documents show.
The government's pension bill has also been steadily rising. The defence budget for 2026-27 includes a pension outlay of ₹1.71 lakh crore, up from the budget estimate of ₹1.60 lakh crore in the financial year 2025-26.
In February, India hiked its defence spending by more than 15% following Operation Sindoor, setting aside ₹7.85 lakh crore for the critical sector in the Union Budget for 2026-27. This included a capital outlay of ₹2.19 lakh crore to boost the armed forces' capabilities with new weapons and systems, including fighter planes, transport aircraft, helicopters, warships, submarines, artillery guns, smart weapons, missiles, rockets and various unmanned systems.
The budget accounts for 14.67% of the overall government expenditure, the highest among ministries.
If the scheme stayed as it was, around 18,300 Agniveers would have been discharged from the three services by the year-end. The first batch comprised around 19,000 Agniveers in the Army, 2,850 in the IAF and 2,550 in the Navy, according to official data.