The Centre's revamped Agnipath recruitment scheme is set to undergo periodic financial reviews as the extension of military service, higher salaries and future pension and gratuity entitlements are expected to increase government expenditure. However, the additional financial burden is unlikely to constrain the government's plans, with senior officials maintaining that national security and the operational readiness of the armed forces will remain the priority.
The revised framework, approved by the Union Cabinet on Wednesday, November 4, allows Agniveers who are not selected for regular service after their initial four-year tenure to continue in uniform for another two years. Those completing the extended period will have the opportunity to join the armed forces as regular personnel, subject to prescribed eligibility conditions and their consent.
The changes mark a significant departure from the original Agnipath recruitment model introduced in June 2022, under which only 25% of Agniveers were eligible for retention in the regular cadre after four years, while the remaining 75% were required to leave military service.
Higher salaries and pension commitments to increase expenditure
Officials familiar with the development said the revised arrangement would require a fresh assessment of the scheme's financial implications, particularly because the extended service period would involve higher salaries and create future liabilities towards pensions, gratuity and other retirement benefits.
One official said the increased expenditure could be partly offset by savings in training costs. Under the revised framework, the armed forces would not need to arrange additional training for personnel continuing beyond their initial four-year engagement, helping contain some of the additional financial burden.
The official also stressed that funding would not be a constraint, adding that national security would take precedence over fiscal considerations.
A second official said the financial implications of the revamped scheme would be assessed periodically to ensure that expenditure remained under review.
What changes under the revised Agnipath framework?
Under the original Agnipath scheme, introduced on June 14, 2022, young people were recruited into the Army, Navy and Air Force for a four-year engagement. At the end of this period, 25% were to be retained in regular service on the basis of merit, while the remaining 75% would return to civilian life with a Seva Nidhi package.
The revised arrangement retains the initial merit-based selection of 25% but gives the remaining 75% an additional two-year engagement, subject to their willingness. At the end of the extended period, they will be offered enrolment as regular soldiers, provided they meet the prescribed selection criteria and consent to continue.
The additional engagement will come with higher remuneration, an enhanced Seva Nidhi package and seniority benefits. According to details reported after the Cabinet announcement, monthly remuneration during the extended period is expected to be around ₹43,500 in the first year and ₹47,500 in the second year.
The revised framework effectively creates a pathway for Agniveers to serve for six years before being considered for regular enrolment, rather than having to leave after four years if they are not selected in the initial retention exercise.
The Defence Ministry said the decision followed a detailed assessment of the scheme's performance over four years. It cited improvements in physical fitness, morale, motivation, discipline, technological adaptability and skills among Agniveers, besides a wider recruitment footprint across districts.
CDS says operational readiness remains the priority
Chief of Defence Staff General NS Raja Subramani addressed the financial concerns surrounding the changes during a joint Cabinet briefing with Union minister Ashwini Vaishnaw on Wednesday.
He said the government's priority was to improve the operational efficiency of the armed forces, meet organisational requirements and address 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 the country's growing salaries and pension expenditure was among the central considerations behind the original Agnipath model, which was introduced in June 2022. The revised arrangement is expected to alter the long-term financial calculations by creating a larger pool of personnel eligible for regular service and associated retirement benefits.
Agnipath allocation rises 58% in 2026-27
The government has already increased the allocation for the Agnipath scheme substantially. The Union Budget for 2026-27 provided ₹17,396 crore for the scheme, marking a 58% increase over the budget estimate of ₹11,039 crore for 2025-26.
The allocation stood at ₹7,471 crore in 2024-25, indicating a significant rise in spending over the past two financial years.
According to budget documents, the Army accounts for the largest share of the 2026-27 allocation at ₹15,173 crore. The Navy has been allocated ₹1,150 crore, while the Air Force's share stands at ₹1,072 crore.
The expenditure comes under the revenue component of the defence budget.
The government's pension commitments have also continued to increase. The defence pension allocation for 2026-27 stands at ₹1.71 lakh crore, compared with the budget estimate of ₹1.60 lakh crore in 2025-26.
Defence spending rises after Operation Sindoor
India increased its overall defence spending by more than 15% in February, following Operation Sindoor, allocating ₹7.85 lakh crore to the sector in the Union Budget for 2026-27.
The allocation includes a capital expenditure provision of ₹2.19 lakh crore to strengthen the armed forces' capabilities and modernise military equipment.
The capital outlay is intended to support the procurement of fighter aircraft, transport planes, helicopters, warships, submarines, artillery guns, smart weapons, missiles, rockets and various unmanned systems.
The defence allocation accounts for 14.67% of the government's overall expenditure, making it the largest allocation among ministries.
More than 18,300 Agniveers were due to leave by December
The changes come at a crucial point for the first batch of Agniveers, whose four-year engagement period is approaching completion.
Had the original provisions remained unchanged, around 18,300 personnel across the three services would have been discharged by the end of December.
Official figures show that the first batch comprised approximately 19,000 Agniveers in the Army, 2,850 in the Indian Air Force and 2,550 in the Navy.
The revised framework offers those who are not selected in the initial 25% retention process an opportunity to continue serving for another two years and subsequently seek regular enrolment.
The decision also comes ahead of Assembly elections scheduled early next year in five states. Uttar Pradesh, Uttarakhand and Punjab, in particular, contribute substantial numbers of personnel to the armed forces.
With the revised framework, the government is seeking to balance the career aspirations of Agniveers, the military's requirements for trained personnel and the financial implications of a larger regular workforce. While the additional salaries and eventual pension liabilities are expected to increase expenditure, the Centre has indicated that the cost will be monitored periodically and will not stand in the way of its national security priorities.