China, our principal adversary, has been at the gates since April 2020, and its collusive partner, Pakistan, has stepped up terrorism through the back door. However, in the defence budget 2024-2025, “butter has got the better of the guns”. With a budgetary allocation of Rs 6,21,940 crore, there is an increase of Rs 28,402 crore over the allocation of Rs 5,93,538 in 2023-2024, but a marginal decrease of Rs 1,949 crore compared to the revised budget estimates of Rs 6,23,889 crore.
This year’s allocation, which is 1.9 per cent of India’s GDP and 12.9 per cent of annual national expenditure, is the lowest since 1960 as percentage of GDP. It is pertinent to mention that, despite economic constraints, past governments allocated the universal norm of 3 per cent or more of the GDP for defence from 1963 to 2010. However, in the last decade, our defence budget has been hovering around 2 per cent of the GDP.
Since 2014, the defence budget has been barely adequate to sustain the military capability with incremental modernisation to maintain the dissuasive deterrent against China and offensive deterrent against Pakistan. However, it is grossly inadequate for transforming the Armed Forces to pose a challenge to China and to give a clear edge in the offensive deterrent against Pakistan. Consequently, we have been unable to compel China to restore the status quo ante April 2020 on the Line of Actual Control or take any punitive military action against Pakistan despite its provocative terrorist actions over the last three years. In the Jammu region, approximately 50 security forces personnel, including 10 soldiers/policemen and 10 civilian pilgrims, were killed in the last two months.
Defence budget allocations
At the macro level, out of the Ministry of Defence’s (MoD) total allocations, 71 per cent (Rs 4.39 lakh crore) is earmarked for revenue expenditure and 29 per cent ( Rs1.82 lakh crore) for capital expenditure. Out of the total Rs 6.22 lakh crore, Rs 4.55 lakh crore has been allotted to the defence services, Rs 1.41 lakh crore for defence pensions (including defence civilians), and Rs 25,563 for MoD (Civil).
The defence services allocation includes the budget for the three services, the Defence Research and Development Organisation, and Defence Public Sector Undertakings. MoD (Civil) expenditure covers its secretariat expenses and those of organisations such as the Coast Guard, Border Roads Organisation (BRO), Defence Accounts Department (DAD), and the Defence Estate Organisation.
Out of the defence services budget, Rs 1.7 lakh crore (27.66 per cent) is earmarked for capital expenditure, while Rs 2.8 crore is allocated for revenue expenditure, including Rs 1.63 crore for pay and allowances and Rs 92,088 for stores (covering repair, maintenance and operational cost of the equipment in inventory).
The capital expenditure of Rs 1.7 lakh crore for military modernisation did register a 5.8 per cent hike over last year’s budgetary estimates and 9.4 per cent over revised estimates. The latter increase was due to Russia’s inability to supply contracted weapons and equipment. The real increase is barely adequate to account for inflation and the rising dollar rate. A heartening feature of the current budget is the 30 per cent increase in the allocation for the Border Roads Organisation.
The gap between projections made by the Armed Forces and allocation has been 17-23 per cent. In a nutshell, the defence budget is disappointing and barely adequate to maintain the current capability. Unfortunately, this has been the norm since 2010 and is a cause of grave concern.
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The way forward
Even with a modest GDP growth of about 7 per cent, India is projected to be a $21 trillion economy by 2047. The BJP-led government has itself defined the national goal of Viksit Bharat 2047, implying a status of a great power or at least the third pole in the international arena along with the US and China. Achieving this goal requires a transformed military to safeguard national interests and maintain absolute strategic autonomy.
Time is running short. China, with an economy five times larger than ours, set a goal in 2015 to transform its military by 2035 and make it the best in the world by 2049. Nine years into this transformation, its declared defence budget in 2023, as per Stockholm International Peace Research Institute (SIPRI) was $296 billion, three and a half times larger than ours, which was assessed at $83.6 billion. Pakistan’s actual defence budget is approximately $10 billion. India has to be prepared for a 2.5 front war—against China, Pakistan and Pakistan’s proxy war in Jammu and Kashmir. And we are setting out to do so with a defence budget of $ 83.6 billion!
The situation is bizarre. With a niggardly defence budget, the politicians, carried away by their own rhetoric, dream of capturing the territories usurped by Pakistan and China. The military hierarchy instead of firmly advising the government about the shortcomings in preparedness says that it is prepared to fight and win the 2.5 front war. Neo-nationalism has further compounded the problem. An emotional and gullible public believes that India can defeat both China and Pakistan.
If India followed the time-tested national security planning procedure of conducting an ethical strategic review, and a government-owned and monitored national defence policy to transform the military, it would be clear that an allocation of 3 per cent of the GDP is essential. All these prerequisites lie within the political domain, and successive governments have wished the problem away. The military has compounded the issue by failing to implement in-house reforms to optimise, restructure, reorganise and modernise with the limited budget available. High-technology wars of the 21st century cannot be fought with a military of the 20th Century.
Two decades back, the eminent economist and former Prime Minister, Manmohan Singh, said, “The government can allocate about three percent of the GDP for defence needs provided the economy grows at an annual eight percent.” Today our economy is growing at approximately 7 per cent. Surely, the government can provide 2.5 per cent of the GDP if not 3 per cent. With all other requirements remaining constant, an increase of 0.5 per cent of GDP will double the capital defence budget. India is forecasted to achieve a $4 trillion economy by the end of this year, and $8 trillion by 2035. And this is the decade in which our military must transform itself to reduce the capability differential vis a vis the People’s Liberation Army.
It is time for the government to think like a great power and begin the transformation of its Armed Forces. And for this, an allocation of 2.5-3 per cent of GDP is inescapable.
Lt Gen H S Panag PVSM, AVSM (R) served in the Indian Army for 40 years. He was GOC in C Northern Command and Central Command. Post retirement, he was Member of Armed Forces Tribunal. Views are personal.
(Edited by Ratan Priya)
Poor Socialist India and her rich ‘socialist’ leaders can provide only this much money for defence. Take .303 rifle, stones, etc, to fight enemies—they say. The remaining money is needed for socialism and the votes they generate, they say.