The Militaria held in Jaipur on 13 March was an extraordinary event in many ways. It showcased India’s rich military history through the dairy and archives of General Amar Singh and we were privileged to learn about the Rajput traditions and valour and their immense contribution at a specially curated event at Kanota Castle. There were also sessions on military strategy and of course ‘Atmanirbhar Bharat, ‘cyber security’ and the ‘challenges in Eastern Ladakh’.
What raised the bar undoubtedly was the fine mix of experts from varied fields—the military, bureaucracy, industry and academia. People from within and outside government, practitioners and theorists were present, and to stitch it all together and ensure the discussions moved in the right direction at the correct momentum, the baton was in the competent hands of Maroof Raza who conducted this event in a flawless manner bringing out the best in everyone.
Amongst this galaxy of eminent speakers was Rajiv Mehrishi, who has held some of the most coveted appointments in the civil service. He has been both Finance and Home Secretary and he was also the Comptroller & Auditor General of India. His knowledge and experience are immense and his views are widely respected. He delivered the inaugural address and also chaired a session.
With our strong leadership and recently demonstrated military capabilities, we must also focus on our economy as it is an important element of our security, which can no longer be misunderstood or neglected. Only then can our ‘military burden’ decline.
In his inaugural address, Rajiv Mehrishi started by giving out a cliché “it’s a rich mans’ world” and then went on to say: “Most conferences and TV channel discussions when they talk about India’s internal and external security fail to talk about the need for India’s economic growth and examining how strong the country’s economy is. In the face of the recent China confrontation, we used three elements—armed forces, trade measures, and diplomacy to face the challenge posed to us.”
All these elements, he added, “require the backing of a strong economy. In these days of technology, one has to be better and smarter equipped and the technological competency will depend on the budget one has. India spends a little over 2% on its defence that translates into Rs 5 Lakh crores. Whereas, China spends 1.3% of its GDP which translates into Rs. 15 Lakh crores. At a time when the enemy is often not seen the only way to really compete with a country like China would be to have as much or more equipment than they have”.
Challenges facing India
Today, India is confronted by a two-front or two and a half front threat, though this two-front conflict is increasingly being seen as one extended front. This is due to the increasing linkages between China and Pakistan. China has invested heavily in Pakistan in recent years through the CPEC and the Pakistani debt is rising. Coupled with that, Pakistan has a high defence expenditure and gets a majority of its defence equipment from China either on a loan payment or on easy credit terms. As per the SIPRI Fact Sheet of March 2019, 35 per cent of China’s arms exports goes to Pakistan, making it the topmost recipient of Chinese military hardware.
We, therefore, need to compare India’s GDP’s of USD 2.869 trillion as per World Bank figures for 2019 both with China, which has a GDP of USD 14.28 trillion and Pakistan, which has a GDP of USD 278.221 billion. Defence expenditures as a share of the GDP must also be compared accordingly which is 1.5% for China 2.1% for India and approximately 4% for Pakistan. However, the figures for Pakistan are merely suggestive as major procurements and strategic programmes are never made public.
In the given economic and fiscal situation, with a marginal hike of around 1.4 per cent, India’s defence budget has been increased to Rs 4.78 lakh crore for 2021-22 as against last year’s allocation of Rs 4.71 lakh crore in the Budget Estimates (BE), while it has emerged that the armed forces spent an additional amount of Rs 20,776 crore under the capital outlay to buy military hardware in the face of the Eastern Ladakh border standoff.
Today, India is confronted by a two-front or two and a half front threat, though this two-front conflict is increasingly being seen as one extended front.
The overall allocation is reflective of India’s current strategic priorities and is reasonable, though not sufficient to meet all the shortages. In the past seven years, the gap between resource projections and allocations, which briefly narrowed from a high of 27 per cent in 2013-14 to 14 per cent in 2015-16, has increased to 30 per cent in 2018-19 and 25 per cent in 2019-20.
What is of greater importance is that the Armed Forces are unlikely to witness a major hike in the budgets in the near future that would be enough to mitigate all their shortages. In 2018, The Standing Committee on Defence had recommended that a fixed budget of 3% of GDP be allotted to ensure adequate preparedness of the Armed Forces. The only option that remains is to perforce cut down some planned expenditure and reprioritise the rest. This is a difficult task which is to be executed by the Chief of Defence Staff (CDS).
The share of capital outlay had also witnessed a decrease within the defence budget. Capital outlay for defence includes expenditure on construction work, machinery, and equipment such as tanks, naval vessels, and aircrafts. Over the last ten years, the share of the defence budget spent on capital outlay had declined. The share was highest during 2011-12 at 30 per cent of the total defence budget, which fell to 22 per cent in 2018-19 (the lowest), and recovered to 27 per cent (in 2020-21). The capital outlay for 2021-22 is an increase of 18.75% compared to last year’s allocation of ₹113,734 crores.
Military and its role
The International Monetary Fund (IMF) in January in its World Economic Outlook, revised upwards the growth forecast for the Indian economy to 11.5 per cent in 2021-22, making it the only major economy expected to register a double-digit growth amidst the COVID-19 pandemic. Thereafter, it is expected to reduce to 6.8 per cent in 2022-23 but will remain the fastest-growing large economy. Hence, if our growth rates are higher, defence allocation will also be quantitatively higher even at fixed percentages.
Defence expenditure forms one of the most important components in our annual budgets and in most government expenditures. There is no doubt that there is a relationship between GDP growth and defence expenditure. What must be noted is that in the mid-’80s, India’s defence expenditure as a percentage of the GDP as per the figures of SIPRI was 4.231 per cent in 1987; this figure has come down substantially. In fact, there was a sharp downward curve once liberalisation was kick-started and in 1992 it came down to 2.4 per cent of GDP, which clearly reveals that an increase in the GDP can result in the percentage of the budgetary outlay being reduced.
Nations allocate a significant portion of their resources for their security requirements. However, given the scarcity of resources and the competing demands from other sectors, a country’s ability to meet all its security requirements is not unlimited. The sheer size of the defence budget and its impact on other sectors of the economy thus more often raises the question as to how much a country can afford for its security requirements. While there are growing security threats that need to be met, conversely spiralling defence expenditure has a direct effect on development, health, education, food security and other priority sectors.
With our strong leadership and recently demonstrated military capabilities, we must also focus on our economy as it is an important element of our security.
While India’s military expenditure has grown 259 per cent over a thirty-year period from 1990 to 2019, the ‘military burden’ which is the military expenditure as a share of the GDP has fallen substantially. Whereas in the case of Pakistan while the military expenditure from 2010 to 2019has risen 70 per cent, its military burden has risen from3.4 per cent in 2010 to 4 per cent in 2019.
There is no doubt that defence and development are seen as mutually exclusive by most analysts as the former uses a large number of funds for destructive or deterrent purposes whereas the latter is used for development. However, without security, there can be no safeguarding a country’s independence, values and territorial sovereignty.
There thus needs to be a fine balance and it is imperative that the focus is on growth. Hence, the relationship between the economy and national security as brought out by Mr Rajiv Mehrishi is extremely relevant as the economy remains a major driver in the national security matrix. In the context of globalisation and economic integration being witnessed, this relationship is becoming increasingly interlinked and more so in a world where power and completion are prevailing.
What Mr Mehrishi touched upon in the inaugural address was expanded upon by Mr Amitabh Kant in his keynote address. Mr Kant is a former civil servant and is currently the CEO of Niti Ayog. In his keynote address at the ‘Militaria,’ he said India’s power is truly represented by its sustained economic growth, which is a key to its future and critical for security reasons or as Mr Mehrishi had earlier stated: “economic growth is central to India’s security”.
While predicting the future is fraught with danger, a large scale war is not visualised in the near future. While India aims to achieve ‘peaceful coexistence and wants to avoid ‘ armed conflict’ but it seems to be heading towards a period of ‘armed coexistence’ wherein conflicts are likely to be localised as witnessed in Doklam and Eastern Ladakh. China under Deng had a policy of ‘hide and bide’ wherein it concentrated on its economy and development and thereafter on modernisation of its military capabilities.
With our strong leadership and recently demonstrated military capabilities, we must also focus on our economy as it is an important element of our security, which can no longer be misunderstood or neglected. Only then can our ‘military burden’ decline.
