India can’t sit at high table with this defence budget. Viksit Bharat 2047 is impossible

FIle photo of the Guards Regiment of the Indian Army during the 76th Republic Day celebrations | ANI

The Press Information Bureau note issued on behalf of the Ministry of Defence proudly proclaims—“In pursuance of Prime Minister Shri Narendra Modi-led Government’s vision of ‘Viksit Bharat @ 2047’ with technologically-advanced and ‘Aatmanirbhar’ Armed Forces, Union Budget of India has made a provision of Rs 6,81,210.27 crore for Financial Year 2025-26 for the Ministry of Defence.” The proclamation implies that the budget is in tune with the blueprint for Viksit Armed Forces for Viksit Bharat 2047 and sets the stage for the two-decade-long pursuit of the lofty ideal.

I am afraid, far from signalling the beginning of transformation of the armed forces, the defence budget 2025-2026 is barely adequate to sustain the existing military capability with only incremental modernisation.

The total allotment of Rs 6,81,210.27 crore ($ 78.5 billion) is 9.5 per cent more than the budget for 2024-2025, but only 6.26 per cent more than the revised defence budget estimates. It just about compensates for the inflation rate of 4-5 per cent and the 4 per cent depreciation of the rupee to the dollar in the last year, which impacts imports. This year’s defence outlay accounts for 13.45 per cent of the total Union Budget of Rs 50,65,345 crore and 1.84 per cent of the projected GDP of $4.27 trillion for 2025.

This allocation includes Rs 1,80,000 crore for capital outlay. It’s an increase of 4.65 per cent from last year and which is only 29 per cent of the budget. The revenue expenditure gets Rs 3,11,732.30 crore, an increase of 10 per cent from last year. Pensions get Rs 1,60,795 crore, with an increase of 14 per cent. And Rs 28,682.97 crore for MoD civil expenditure with an increase of 10 per cent. Allocation for pay, allowances, and pensions increased by 24 per cent accounting for 49.6 per cent of the total budget. The Border Roads Organisation (BRO) receives a substantial 9.74 per cent increase, with an allocation of Rs 7,146 crore. The budgetary allocation to the Defence Research and Development Organisation (DRDO) has been increased by 12.41 per cent to Rs 26,816.82 crore from Rs 23,855.61 crore in 2024-25. The allocation of capital budget for the Indian Coast Guard has increased by 43 per cent from Rs 3,500 crore to Rs 5,000 crore.

As the third pole in the international arena in 2047, Viksit Bharat would require state-of-the-art armed forces that ensure and, if the need arises, enforce, absolute strategic autonomy to safeguard its national interests. The creation of Viksit Armed Forces requires a national security vision for 2047, a national security strategy reviewed every five years and a national defence policy, none of which formally exist, to transform the military. And above all, transformation requires the defence budget to increase exponentially. In the interim two decades, we also have to cater for a volatile strategic environment, in which military might will call the shots—as is evident from the wars in Ukraine/Gaza, US President Donald Trump threatening to take over Greenland and Gaza, and our own border confrontation with China since 2020. India’s principal adversary, China, which has a defence budget of $ 296 billion, is in cohort with Pakistan which has a defence budget of $ 7.64 billion and now possibly also Bangladesh which has a defence budget of $ 3.6 billion. This poses direct security challenges that jeopardise the Viksit Bharat mission. This makes a surge in the defence budget for at least a decade a compulsion.

China model

China offers a good example of interim timelines to cater to perceived threats from the US and to regionally enforce its will, while pursuing its long-term goal of creating the best military in the world by 2049. In tune with China’s dream of a “powerful and prosperous” nation that would acquire “great power status by 2049”, Beijing began comprehensive military reforms for the transformation of the People’s Liberation Army in 2016. Goals with timelines were clearly spelt out. Mechanisation with significant “informationisation” was to be completed by 2020. Integrated development of mechanisation, “informationisation” and “intelligentisation” was to be accelerated by 2027 (100 years of PLA). Comprehensively, advanced modernisation of national defence is to be achieved by 2035. And the full transformation of the PLA into a world-class force by 2049 (100 years of People’s Republic of China). “Informationisation” refers to the denial of information to the enemy for the command, control and use of weapons, and fully exploit it yourself with enhanced electromagnetic, cyber and space capabilities. “Intelligentisation” is the full-spectrum exploitation of AI in all facets of military activity—including intelligent weapons/platforms, bots and autonomous weapon systems, and robotic soldiers with technical support from intelligent networks, cloud, big data and the Internet of Military Things.

The first two timelines, aimed at being in a position to challenge the US, have already been achieved. The third timeline of 2035 seeks parity with the US and thereafter consolidation would continue up to 2049. China’s defence budget has surged from $196 billion to $296 billion from 2015 to 2023 while its GDP increased from $11.06 trillion to  $18.2 trillion. The declared defence budget of China was approximately 2 per cent of its GDP. However, defence analysts have assessed that the actual defence budget is 50 per cent higher.

Defence budget model for India

In terms of GDP, we are on course to be in the same position as China is to the USA today by 2047. China’s defence budget in 2008 was $78.78 billion, approximately equivalent to our level in 2025. Mathematically, we are 17 years behind in defence budget allocation. India followed the universal norm of spending three per cent of the GDP on national security from 1963 to 2010 to fight the wars of the 20th century. But for the last decade, our defence budget has been hovering around two per cent of the GDP. This stagnation has created a huge military differential in favour of China which will be unbridgeable even by 2047 if the defence budget does not increase exponentially.
We are a decade behind China in beginning the transformation of the armed forces. Adopting a similar model to China, India should transform its armed forces to be in a position to challenge Beijing by 2035 and seek parity in military prowess by 2047. To achieve this, the defence budget must immediately surge to 4 per cent of GDP for a decade and be kept at 3 per cent or more thereafter. Even at the current slowed-down GDP growth rate of 6.3 to 6.8 per cent, Indian economy will double in 11 years and will hit $8 trillion by 2035. By 2047, it will be approximately $17.5 trillion. At 8 per cent growth, it will become $ 9.5 trillion by 2035 and $23 trillion by 2047.

A surge to 4 per cent of GDP at the current growth rate would take our defence budget to $320 trillion in 2035, at par with what China’s budget is likely to be in 2025. And if holistic military reforms are undertaken, militarily India will be in the same position as China is to the US today.

Guns versus butter

Of course, the ‘guns versus butter’ debate would justify prudence considering that when China began its current military reforms in 2015, its GDP was $11 trillion. But India faces an active and direct threat from China which can destroy its economy. China, meanwhile, faced no direct threat and was the investment destination of the world for 35 years.

At 2 per cent of the GDP, as has been the norm since 2010, the defence budget will only be at par with China’s present defence budget in 2045. Thus, for 20 years, we will be at the mercy of China, which can not only embarrass us at will but can also jeopardise the dream of Viksit Bharat 2047.

Imagine the transformation that can take place in 10 years with an additional 2 per cent of the GDP or $85 billion being available for the capital budget. Even the traditional 3 per cent of the GDP would give us an additional $43 billion for the capital budget.

If India wants to retain its strategic autonomy and sit at the high table by 2047, a defence budget of 4 per cent of the GDP is a must for the next decade and a minimum of 3 per cent is a compulsion.

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 the Armed Forces Tribunal. Views are personal. 

(Edited by Theres Sudeep)