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Agnipath 2.0 may ease personnel shortages and retain trained soldiers, but higher pay and benefits risk adding to pension costs and squeezing funds for defence modernisation.
 "Agniveer")
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Changes to the Agnipath scheme aim to retain trained personnel for longer, but higher salaries and benefits could increase the defence budget burden and affect spending on military modernisation. | Photo: PTI
Business Standard Editorial Comment
3 min read
Last Updated :
Nov 08 2026 | 7:18 PM
IST
The Centre’s decision to modify the Agnipath scheme partially reverses the objective for which this recruitment programme for the defence forces was launched four years ago. Introduced following the government’s acceptance of the One Rank One Pension (OROP) scheme for the defence services in 2014, it sought to contain the burgeoning costs of personnel and pension owing to that decision. The original Agnipath scheme offered a four-year term of duty for soldiers below the rank of commissioned officers for all three services, bypassing traditional service benefits such as pension and rations. Those exiting the scheme after four years would be receiving a lump sum payment (Seva Nidhi) and support for future employment after discharge. The initial scheme provided for 25 per cent of Agniveers to be absorbed into the regular services on the basis of merit after the four-year term. An analysis by the Observer Research Foundation suggests that an Agniveer costs the government roughly ₹1.75 lakh less a year than a traditional soldier on standard pay bands. Under the new scheme, the 75 per cent of the Agniveers due to exit have been offered a two-year extension with a sharp pay increase of ₹43,500 and ₹47,500 in the two-year period with an option to enrol as regular soldiers at the end of two years based on their willingness to continue and merit. Those who exit after this two-year extension will benefit from an enhanced government contribution to the Seva Nidhi package from 50 per cent to 70 per cent.
