Do we spend enough on defence? The general narrative in the commentariat forever is a resounding NO. The point received some recent impetus when the Army Chief, General Bipin Rawat said that the military is not getting its due share of national resources. For good measure, the Chief also said that India should take lessons from China in this regard.
Lack of enough spends on defence is an old chestnut - question is, how valid or even accurate is it?
Lets look at the headline number everyone quotes (often inaccurately), military spending as a % of GDP.
Source: World Bank
As can be seen, not only is India well in line with rest of the world in terms of how much of our GDP we spend on defence, we are in fact ahead of China in this regard. Of course, given the disparity in the relative economic sizes, China spends a lot more on absolute terms, but the solution to that is to expand our own resource base (GDP) to afford a greater spend. However, do we spend too little? Data doesnt suggest that at all, in fact its quite to the contrary.
However, its not just about GDP, but also budget expenditure-intensity of defence. Finally, defence can be funded only out of the public exchequer. And there are competing demands for the limited tax-kitty that funds defence too. And it is here that India is an absolute outlier, on the negative kind.
Chinese budget numbers are not available, but India spends clearly a very high proportion of its Central Budget on defence. Comparable to the US, and only marginally short of Pakistan, where the military is in charge of government and tends to have outsized share of resources and influence.
Put the two together - proportion of GDP and proportion of central govt expenditure, and the oft-repeated lament of low spend on military doesnt stand up to scrutiny. So, what really is the issue?
In simple terms, its quality not quantity. We spend enough, but we underspend on quality. It has 2 facets.
One, we spend too much on salaries and pension. In the last 4-5 years, 45-50% of the defence budget has been spent on personnel costs. As a comparative benchmark, US spends around 25-30% of its defence budget on personnel costs. Bad news doesnt end there though. Thanks to OROP and a steady increase in the number of personnel (Indian Army has expanded around 25% in the last 15 years, a period when almost all major militaries have downsized on personnel), the pressure of salaries/pension is only going to increase.
Two, India is unique in terms of its import-intensity of expenditure on military. For years, we have been amongst the top 3/4 weapons importers in the world. Of late, we have acquired the dubious distinction of being the numero uno!
Source: SIPRI
Countries which spend more than India on defence (as proportion of GDP) - Russia, US, Israel - typically are large net exporters. The military industrial complex is a large part of their domestic economies/employment. For India, conversely, large chunks of the defence budget go to financing imports, with no network externalities in the domestic economy. Its a double whammy, where we spend a pretty large sum of money, while not creating long term benefits for the economy. There is adverse military impact too, as imported weapons are often not available when they are most needed (ammunition for Bofors gun during Kargil as a case in point).
In nutshell, Gen Rawat (and the commentariat) is completely wrong. India doesnt lag in spending on defence - we spend as much as we can afford (and some more). The issue is on quality. Unless we improve upon that, we will continue to derive sub-optimal outcomes for the considerable sums that we are spending on securing India.
Lack of enough spends on defence is an old chestnut - question is, how valid or even accurate is it?
Lets look at the headline number everyone quotes (often inaccurately), military spending as a % of GDP.
Source: World Bank
As can be seen, not only is India well in line with rest of the world in terms of how much of our GDP we spend on defence, we are in fact ahead of China in this regard. Of course, given the disparity in the relative economic sizes, China spends a lot more on absolute terms, but the solution to that is to expand our own resource base (GDP) to afford a greater spend. However, do we spend too little? Data doesnt suggest that at all, in fact its quite to the contrary.
However, its not just about GDP, but also budget expenditure-intensity of defence. Finally, defence can be funded only out of the public exchequer. And there are competing demands for the limited tax-kitty that funds defence too. And it is here that India is an absolute outlier, on the negative kind.
Chinese budget numbers are not available, but India spends clearly a very high proportion of its Central Budget on defence. Comparable to the US, and only marginally short of Pakistan, where the military is in charge of government and tends to have outsized share of resources and influence.
Put the two together - proportion of GDP and proportion of central govt expenditure, and the oft-repeated lament of low spend on military doesnt stand up to scrutiny. So, what really is the issue?
In simple terms, its quality not quantity. We spend enough, but we underspend on quality. It has 2 facets.
One, we spend too much on salaries and pension. In the last 4-5 years, 45-50% of the defence budget has been spent on personnel costs. As a comparative benchmark, US spends around 25-30% of its defence budget on personnel costs. Bad news doesnt end there though. Thanks to OROP and a steady increase in the number of personnel (Indian Army has expanded around 25% in the last 15 years, a period when almost all major militaries have downsized on personnel), the pressure of salaries/pension is only going to increase.
Two, India is unique in terms of its import-intensity of expenditure on military. For years, we have been amongst the top 3/4 weapons importers in the world. Of late, we have acquired the dubious distinction of being the numero uno!
Source: SIPRI
Countries which spend more than India on defence (as proportion of GDP) - Russia, US, Israel - typically are large net exporters. The military industrial complex is a large part of their domestic economies/employment. For India, conversely, large chunks of the defence budget go to financing imports, with no network externalities in the domestic economy. Its a double whammy, where we spend a pretty large sum of money, while not creating long term benefits for the economy. There is adverse military impact too, as imported weapons are often not available when they are most needed (ammunition for Bofors gun during Kargil as a case in point).
In nutshell, Gen Rawat (and the commentariat) is completely wrong. India doesnt lag in spending on defence - we spend as much as we can afford (and some more). The issue is on quality. Unless we improve upon that, we will continue to derive sub-optimal outcomes for the considerable sums that we are spending on securing India.
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