For the past two decades, India’s military expenditure has hovered around 2.75% of the gross domestic product (GDP). But since India has been experiencing significantly higher rates of GDP growth over the last decade compared with any other time in its history, the overall resources that it has been able to allocate to defence have grown.
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Still, the Armed Forces for long have been asking for an allocation of 3% to adequately meet their modernization requirements. This has also received broad political support in recent years, since its political elite would like India to emerge as a military power of global reckoning. Prime Minister Manmohan Singh has been explicit about it, suggesting that “if our economy grows at about 8% per annum, it will not be difficult for (the government) to allocate about 3% of GDP for national defence”.
Parliament has also underlined the need to aim for this target.
But talking about this figure isn’t enough: Most of the debate in India on defence budget tends to get focused on the amount that the government allocates to defence. The real issue, however, is how effectively these resources get utilized.
The defence budget for 2009-10 may have increased by 34% over the previous year—it was one of the highest rises in Indian history—but a large part of this increase went to the increased salaries recommended by the Sixth Pay Commission. And while the operating expenditure of the Forces has been rising, capital expenditure declined last year. This does not bode well for defence modernization.
In fact, the defence ministry was not even able to fully spend the capital budget allocated to it in 2008: That’s a sign that the Armed Forces, worrying more on operating costs than long-term investments, are not being pushed to improve their teeth-to-tail ratios. Of the three services, the Indian Navy is the only service acting against this trend. In the absence of any strategic guidance, modernization plans will continue to lag behind.
And merely allocating budgetary resources will not make a difference so long as India continues with its archaic bureaucratic procedures. Greater transparency and efficiency requires focus, or else there will be more corruption in defence procurement.
On a broader note, there is a need for India to strengthen its diplomatic and military capabilities in consonance with its rise as an economic power. Contrary to what those who argue in favour of spending on development instead of defence say, the “guns versus butter” debate is spurious: Unless adequate provisions are made for defence, no state will be able to pursue its developmental agenda. This is even truer in India, which faces a unique security environment with two of its “adversaries” straddling it on two sides of its borders and problems on all sides of its periphery. Compared with China’s 7% and Pakistan’s 5%, India’s defence budget continues to be low.
Finally, the issue of spending on defence should also require taking a closer look at the foreign ministry’s budget. That budget may have increased by 24% last year, but the Indian foreign service needs a major revamp; it continues to be extremely small, compared with the expanding interests of India, in almost every part of the world. Defence and diplomacy are two sides of the same coin and India can’t afford to ignore either of these.
There is no substitute for strategic thinking and institutional effectiveness in foreign and security policymaking. We may well need a blue ribbon commission to inquire into this. Otherwise, budgets will come and go without adequately serving Indian security interests.
Harsh Pant teaches at King’s College, London, and is currently a visiting fellow at the University of Pennsylvania. Comment at firstname.lastname@example.org