Indian defence budget
Allocations for Defence Services got only a brief mention in the Indian Finance Minister’s Budget speech. Harvard-educated Mr Chidambaram gave only out an overall figure, promising Indian legislators that “if required, more funds will be made available in order to equip our (sic Indian) armed forces in “fighting fit” condition”, unquote. Indian Prime Minister, Mr Deve Gowda, added to the Treasury’s pledge by reiterating that “additional allocation will be made from the point of view of strengthening our forces to take care of the security of the nation”. Despite these promises (and additionalities thereof) the Indian defence budget is being criticised by politicians and political analysts as well as serving and retired Indian armed forces officers since they expected much more up front for force modernisation needs, adjustments for inflation, rise in oil prices, currency fluctuation and increase in salaries. Former PM Vajpayee has accused the government of “not paying adequate attention to the defence sector”, in reply Defence Minister Mulayam Singh has promised the Armed Forces “the best equipment for them”.
This drumbeat of criticism within India is far removed from the reality that the allocations represent a 9.5% increase over the 1995-96 budget estimates, not including an additional Rs.1300 crore provided in the previous budget for defence production and acquisition of new equipment. More importantly, the defence budget cannot be taken at face value because of allocations in other sectors, eg. pensions of ex-servicemen amounting to Rs.3300 crore is not catered for under the defence estimates head. In fact other than pensions, provisions for research and development, para-military forces like Border Security Force (BSF), Indo-Tibet Border Police (ITBP), Assam Rifles and Rashtriya Rifles, nuclear and missile development, border roads, etc are made against other ministries. For public consumption, the Indian defence budget for 1996-97 is supposedly Rs.277.980 billion, which amounts to 2.4% of the GDP and 19.2% of the overall budget. But if we take into account the funding hidden under other heads, the figure shoots up more than 30% upto Rs.400 billion (or 3.5% of the GDP and 27.63% of the Budget) — and these are pledged to be further revised. This camouflage is necessary to maintain the propaganda with the international media that the declared budget is a “soft one” and “development oriented”, meant to carry forward economic and structural reforms, liberalisation, etc as well as catering for social inequity and poverty alleviation. The increase in real terms (ie. if declared inflation of 4.4% is taken into account) is about 5%, overall this percentage is also maintained in the hidden allocations. The “criticism” of the declared budget is motivated and sponsored, meant to give credibility to Indian claims that already scarce funds are not being diverted for defence needs, meant to satisfy IMF/World Bank concerns. India’s propaganda machine is well served by non-government sources, on the other hand in Pakistan seems fashionable for everybody and his uncle to become arm-chair defence experts in analysing the drawbacks of increasing financial allocations for defence relative to socio-economic uplift.
There is no competition with India’s war machine, only a need to maintain credible defence. Pakistan defence budget is almost one-third of that of India at Rs.131.4 billion, showing an increase of 15.2% over the previous year, being 6.8% of the GDP and 26% of the overall budget. This makes for a decrease of 7% in the last seven years, from the high of 33% of the overall budget in 1990-91. In real terms when adjusting for inflation, the allocations are less than that of the previous year. Since India’s economy is much larger, more than 6 times that of Pakistan, its growth rate is proportionate to its size. A comparison of the defence budget as a percentage of the GDP of the two countries thus becomes grossly misleading. Japan spends only 1% of her GDP in defence, yet in actual dollar value it exceeds the Chinese allocations for defence of 5.2% of the GDP due to the differential in the size of the two economies. If comparison be really made on a compatible platform, then the Indian 3.5% of the GDP would make 21% of Pakistan’s GDP (three times the Pakistani outlay) while our defence outlay would be only 1.17% of the Indian GDP (one-third that of India’s outlay).
Why does India need to do such vast spending on defence? For years India has been expansionist in design as is apparent from its sorry history with everyone of its neighbours. It has been engaged in an exercise of over-kill in projecting its security needs by implied multi-dimensional and multi-directional threats from China and Pakistan. When the US started lifting large-scale arms and mountain-warfare equipment to India in 1962 during the short-lived India-China War (provoked by the Indians in the first place) along the Himalayas, at the top of the Indian wish-list from the Americans were submarines (presumably to stop the Chinese coming further down from the Himalayas). Despite a most favoured stance of the liberal-Democrat Kennedy Administration towards Jawaharlal Nehru’s India, even the Americans balked at this outrageous request. Any defence analyst worth his salt would be quickly able to surmise from the locations of Indian army cantonments, air bases, border logistics installation and deployment of Prithvi missiles that Indian defence posture is basically Pakistan specific. With Pakistan forced to counter Indian concentration all along the 800 kms Line of Control (LOC) in Kashmir and Northern Areas, the defence spending is almost equal. This puts us in a disadvantageous position vis-a-vis India elsewhere along the international border. By earmarking at least 5% of its defence allocation for R&D, India has been able to maximise indigenous production, thereby further effecting foreign exchange savings that have been diverted to further acquisition. Relying on relatively cheaper Russian sources for its acquisitions, transfer of technology and production under licence, India has further boosted its indigenisation process. Frankly, for this we have to blame our planners over the years who seem to have been influenced by those proffering “commissions” against imports not available against local manufacturing on the same scale. As compared, Pakistan is far behind India with respect to local manufacturing of tanks and fighter aircraft, etc. We are thus further handicapped with respect to absolute comparisons of defence potential relative to Indian capabilities.
With a more than three to one advantage in all three of its defence services facing Pakistan along the international border, a very favourable attack ratio, India’s great advantage is in its nuclear and missile arsenal, for which we do not as yet have a credible answer. For legitimate security needs why does not India be satisfied with parity in opposing forces, on the contrary opting for a ratio that suggests optimum attack ratio? Even then Indian propaganda, orchestrated by its intelligentsia through the whole spectrum of local and international media, continues to insist that its security needs are not served adequately by the money allocated to it. On the other hand Pakistan is ill-served by economic analysts and commentators who despite our relatively numerically and quantitatively smaller numbers refuse to take into account the ground realities as regards our security needs in maintaining a credible defence posture. It hurts internationally when well-spoken world-level economic technocrats like Dr. Mahbubal Haq, Shahid Javed Burki, etc chastise our defence expenditures without taking into account our bare legitimate needs in having an effective counter to Indian designs. While they may be justified on socio-economic assumptions this analysis cannot be done in isolation of the security environment. Their argument is that money spent on defence is a diversion from desperately required development work. In the face of the heavy expenditures by India on its defence services with a marked directional emphasis on Pakistan as regards their defence posture, we are spending a bare minimum in comparison. Our analysts need to focus on the reasons as to why India needs to hide Rs.132.12 billion out of its actual Rs.400 billion budget (i.e. 30%) in allocations other than under “Defence Services”. Incidentally, the hidden figure is more than the entire Defence Budget of Pakistan (Rs.131.4 billion).
Freedom has a price. Given our meagre resources, the amount we spent on defence may seem exorbitant in isolation of the security environment, but in keeping with it the sums being spent are not even adequate. We cannot blame anybody but ourselves for the low level of indigenisation, however we need to correct this in a hurry. For adequate defence, India needs parity and if it still is under-confident of the capabilities of its defence establishment when facing Pakistan, a numerical and quantitative superiority of 2:1 should be psychologically enough to cope with our forces. At a 3:1 ratio, India goes into an attack mode, with the inadequate funds available to us we cannot even maintain that parity. For defence analysts, India’s hidden budget points to an hidden agenda, Indian steel being felt by its neighbours more often than not. For Pakistan, the minimum we have to do is to be somewhat better than the adverse 3:1 advantage India had over us presently. For that we need funds — or at least the same sleight of hand budgetary funding that allows India to hide 30% of its defence budget. It is better to be safe than sorry, as a country faced with a constant threat of Indian aggression and in an insecure regional environment, we have no other choice but to put adequate funds at the disposal of our Defence Services.
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