China matches India’s expansion in military spending - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Friday 4 March 2011

China matches India’s expansion in military spending

Right: Attending a Sino-Indian border meeting at the Spanggur Gap near Chushul

Below: Flying back to Leh in an IAF Cheetah past the Panggong Lake

Both our defence budgets reveal only part of what we actually spend

By Ajai Shukla
Business Standard, 5th March 11

The announcement of a country’s annual defence expenditure is as much about geo-political signalling as about budgeting. From New Delhi, where the government announced a 12% increase in defence spending last Monday, here is the big message: notwithstanding our focus on development and social justice; and despite the still uncertain international economic climate, India will spend what is needed for an acceptable level of security.

Finance Minister Pranab Mukherjee, while presenting the union budget in parliament, allocated Rs 164,415 crore (US $36.53 billion) to defence, which amounts to 2.2% of the GDP and 13.07% of government spending. This continues an almost unbroken series of annual double-digit increases over the preceding decade, reflecting India’s economic growth as well as the uncertain security climate in the region.

New Delhi’s security concerns were mirrored in Beijing this morning, with China’s announcement of a 12.7% increase in defence spending for 2011. In a statement that spread ripples of concern through the Asia-Pacific, China raised defence allocations to 601.1 billion Yuan ($91.5 billion), up from last year’s 532.1 billion Yuan ($81 billion).

In March 2010, after Beijing’s relatively modest 7.5% hike in defence spending, China experts had concluded that the People’s Liberation Army (PLA) was tightening its belt in an uncertain economic climate. But with today’s rise, following a year of confrontation in the East China Sea with the US, Japan and South Korea, PLA watcher Rory Medcalf of the Lowy Institute in Australia avers that, “What this budget figure suggests is that deep down, China’s priorities haven’t changed.”

Experts agree that Beijing spends far more on the 2.3 million-strong PLA (a term that includes China’s army, navy and air force) than what it divulges. The additional funds, which are estimated at 50-150% higher than the announced figure, are believed to come from the PLA’s sizeable network of commercial enterprises that include hotels, transportation agencies and vacation resorts. Since Beijing provides no detailed breakdown of government expenditure, funds are also diverted from other government departments.

Hiding the picture

This is also partly true of India. New Delhi masks a number of allocations that are universally regarded as defence expenditure, burying them in the allocations for other ministries. Business Standard has calculated, by applying international norms of what constitutes defence expenditure, that the budget for 2011-12 actually allocates Rs 235,962 crore for defence. A full Rs 71,547 crore of direct defence expenditure has been reflected under other heads.

Consider the following: The MoD budget does not include the defence pension bill of Rs 34,000 crore, nor the defence ministry’s allocation of Rs 4156 crore. Also shown as non-defence expenditure is Rs 7602 crore budgeted for atomic energy; even though this funds the institutions that develop, build and store India’s nuclear weapons. Slipped quietly into the allocations for the Ministry of Road Transport and Highways is Rs 3165 crore for the Border Roads Development Board, chaired by the minister of state for defence, which builds and maintains strategic roads in border areas.

Meanwhile central police and paramilitary forces that are directly employed --- often under the army’s command --- for border security and counter-insurgency operations are funded separately. A Rs 22,624 crore chunk of the Ministry of Home Affairs budget is used for this, including Rs 7369 crore for the Border Security Force; Rs Rs 447 crore for the National Security Guard; Rs 1900 crore for the Indo-Tibet Border Police; Rs 2544 crore for the Assam Rifles; Rs 1601 crore for the Sashatra Seema Bal (SSB); 7625 crore for the Central Reserve Police Force; Rs 968 crore for Border Management and Rs 170 crore for Coastal Security.

This list does not include forces involved in day-to-day policing rather than national security. The allocations left out are Rs 2930 for the Central Industrial Security Force; Rs 40 crore for the National Intelligence Grid; Rs 947 crore for the Intelligence Bureau; and Rs 3309 crore for the Delhi Police. Also excluded is Rs 279 crore budgeted for the Special Protection Group, which handles VVIP security.

Also regarded as non-military expenditure is the Rs 6626 crore allocation to the Department of Space, despite frequent international allegations of technology leakage into the DRDO’s military missile programme. Scrutiny of the Department of Space budget --- with its transparent allocations to individual technology programmes --- reveals conformity with an earlier government decision to firewall the space programme from missile development.

Taking the figure of Rs 235,962 crore as the real defence allocation, the government has actually allocated 3.16% of GDP and 18.76% of government spending to defence. This accedes to a long-standing demand from India’s strategic community for defence allocations to be at least 3% of GDP.

Interestingly, the obfuscation in India’s real defence expenditure goes hand-in-hand with a new transparency in this year’s defence budget. The first project under the “Make” procedure of the Defence Procurement Policy (DPP) --- which is the development of a Future Infantry Combat Vehicle (FICV) by two consortiums led by Indian companies --- has been allocated Rs 118 crore and even provided Rs 82 crore in the revised estimates of 2010-11.

Similarly, the budget breakdown reveals that the funding for “Special Projects”, which is code for the nuclear submarine project, has been allocated Rs 501 crore, up from Rs 292 crore in 2010-11.


  1. I guess you have become a chinese correspondent .....

  2. "Hindi chini bhai bhai"4 March 2011 at 20:09

    WOW ! Thank you for your hard work, I as a chinese thank you for revealing all those hidden and otherwise non-obtainable data through spies.Thank you so much for so easily providing all those to us.People like you are really good for our china, we do not need spy to send to india for any info.People like you already giving all the details with so much proud, thank you so much.
    ALSO TELL US DETAILS ABOUT MILITARY,NAVAL AND AIR BASES WITH PHOTOS AND MISSILE LOCATIONS WITH THE STRENGTH OF ALL THE MOVABLE AND NON MOVABLE ASSETS, thank you once again. We admire your hard work, China do not need any spy for India, all it needs is Indian media and bloggers, and also India do not need enemy as it is already having good media and blogger(to be it's enemy and destroy from inside)Thank you so much dude.Looking forward for more details from you for all those HAL PICS AND AIRPLANES PICS, that's all very good to analyze and accomodate in our design many times.Thank you for telling us about all those SO CALLED TOPE SECRET PROJECTS through your blogs time to time.
    thanks a lot, I am overwhelmed by your help for our great country the peoples republic of china.
    Also convery our thanks to times of india , zeenews, hindustan times and so on.. for their hard work and strong help to us and saving us money and time (which otherwise we could have spent for spy and other things).
    In china we don't have any way to know so much details of strategic things even about our own PLA but we know much more about India's plan and projects through your GOOD MEDIA AND BLOGGERS.
    Thanks a lot again.

  3. "Hindi chini bhai bhai":

    It's not just your name that is ridiculous... you're overall a ridiculous fool.

    The information in my article --- which you term as "hidden and otherwise non-obtainable data" --- is from the Budget 2011-12 figures posted by the government on the Ministry of Finance website.

    Beijing has fully analysed those publicly available figures by now! It is only nitwits like you, who have lots of opinion, but no facts, who think this is all highly secret stuff.

    But I'll convey your thanks to all those who analyse the figures. They serve to educate lumpens like you.

  4. And what was the purpose behind such a self-goal ?

  5. @Hindi-Chini-Bhai-Bhai

    Are you really that dumb? You can look up and find that info for last 10 budgets in as much detail. There is a reason this info is public - FOR DISCUSSION and debate! The whole idea of the article is that India being democratic has upped its figure while giving the breakdown in a detailed manner but China has only admitted to a 12.7% increase with absolute zero credibility and transparency.

    This kind of info is available for all major democratic nations - US, Australia and Britain to name a few. Let's debate real issues and not get bogged down by arm chair general logic.

  6. Sorry, did not understand the point of this article. Very detailed... rambling.
    Maybe you would like to be a consultant at CAG.
    But we are not accountants, stop!!
    Let the siachen dhruv show begin.
    Pictures please.

  7. Ajai Sir,

    A 12% nominal rise in 10-20% inflation (depending on which basket of goods you use) is hardly a major jump in defence expenditure.

    In a list of countries with high military expenditure India is only the 9th (source ..SIPRI). And we have the 4th largest airforce, 2nd largest army and 5th largest navy. Even Saudi Arabia spends more than us on defence (USD 39 billion in 2009). In terms of % of GDP US spends a bit over 4%, Britain even after massive cuts spends 2.2%, France around 2.1%, Russia 3.5%.

    Pak and China as you know spend much more as a % of their GDP. Pak also gets substantial US funding.

    And I dont think we obfuscate that much. We should be we dont! Apart from pensions (where does this go), all other heads are not used exclusively (direct in your words) or even mainly for defence.

    Atomic Energy - a lot of it goes to establishing civilian facilities, Border Roads - these roads are used by everybody not only by the army. Last I knew BRO was under the Ministry of Surface Transport and DGBR reported to EnC and MoSurface Transport not MoD. Dept of space - as you say their spending is indeed ring fenced from DRDO's.

    I would add that alomost half of the IAFs airbases are used for civil aviation (causing huge problems), both the navy's major bases are used atleast 50% for shipping, INS Hansa the navy's premier air base is used more for commercial flights than defence, the defence forces are used a lot in natural calamities.

    I wonder how all that is accounted for.

    Re the CPOs my case is that the CRPF should definitely not be considered as defence expenditure. The BSF and ITBP should be thought of as defence related only to the extent that they patrol the borders.

    Their use in Counter Insurgency alongwith CRPF is primarily a police role. Wihout taking away from the deadly combat I would say that technically even the army is in a police role in CI Ops. Infact thats why RR was created to get the home ministry to fund what should be rightly home ministry operations! Upto 3/4 years ago they still owed the def ministry over 5000 crores.

    Depending on your philosophy of military and non military expenditure you would come up with a range of numbers. Using a very rough and ready calculation I would put the overall defence spending number at around 2.7% of GDP.

    But whether it is 2.2, 2.7 or 3%, if we could spend these allocations in time we would have a huge part of our equipment problems solved! A lot of the budget lapses each year as our processes take eons leaving us with the mess we are in...

    No subs, no planes, no arty pieces,
    Pilots die when Anthony sneezes;
    No strategy,no L&T,no Manekshaw Sam
    And no one gives a damn.....

    Talking about the MoD I wonder what they do with a 4,000 cr allocation. Incompetence is a costly affair but this is really adding insult to injury.


  8. Hi Hindi Chini Bhai Bhai,

    Thanks mate, for telling us we have a plan! I didnt know we did. Please do tell me what our plans are? I am really curious.

    Oh my God, thats our make you believe we have one while we dont..isnt that cunning?

    Re you incorporating our designs wow now thats a compliment. Thank you!

    Movable and Non Movable Assets :

    A) Non Movable
    - The Great Indian Bureacucracy,
    - Our politicans from their path of self preservation,
    - Our Ministry of Defence

    B) Movable
    - USD 1-2 trillion of wealth in Swiss Banks movable to safer havens. I belive there is a bit of Chinese money there too.
    -Our patience with big issues (not with small ones)...its infinitely elasic



  10. hah Ajai Sir you look a bit like a Taliban in the pic.

  11. Ajai Sir,

    Agree to what Akshay mentioned earlier, we don't obfuscate much with all these details. Too honest of a Defense Minister is more liability than asset! What really matters is we have no clue where Chinks are spending that 50-150% undisclosed funds ! (Recall that stealth pics popping up just days before Gates Beijing visit back on Jan!)

    Anyway, UPA is a scam high govt. Personally have stopped expecting anything decent out of bunch of worst lot of ministers. Some idiots don't learn even after a hard kick in the back. 1962 and Congress.Lets just leave at that.

  12. Sir ,
    When are you going to post the story about Dhruv in siachen ?

  13. DO they play to raise self sufficiency in every budget ? Because I can see that Chinese are doing that. Every year they steal, reverse engineer fake more and more weapons. Where are we ? Spending more in name of defense is fine, if it also has a part to lift the indigenous efforts.

  14. Does the increase... Guarantee security, if no... then you are spending not enough... Nobody will provide Republic of India's... Security!!!... She has to build... Her own... Any of India's... Conqueror... Allow Her Citizen... to Stand... Tall, Free, and Independent... if no... India is spending not enough...


    Globally India stands almost 10th in the matters of defense expenditure. When we see Papistan as an additional adversary front then this figure looks somewhat feeble.

  16. I would say most of the details being separated from defence budget is fine as they dont add any "offensive capabilities"(bar nukes maybe) to the nation.

    For example, allocating budget to BRO for building roads. It should have been done by normal PWD or NHAI. But due to incompetency of NHAI, it has been done by BRO, a IA army. If the roads are exclusively used by defence then yes it can said be a part of "defence budget". It is not.

    Nor is defence pensions added any offensive power to the nation deterrent.

    The call for 3% defence budget is allocate more resources which can used to "build national defence", not maintain it. Funding CPF, Paramillitary or even COIN units is still maintaining national defence.

    Pakistan or China will not be deterred by us better equipping RR & COIN units. They will be when resources are allocated to Strategic programs, EW systems, increased surveillance coverage over the nation, border management, rapid response systems
    etc. All oriented towards handling external threats.

    Budget for protecting politicians can hardly be considered national defence.

  17. Haathi Kay Daante Khanay Kay Aoor and Dikhanay Kay Aoor.

    Good analysis well done.

  18. Shuklaji is looking like Ahmed Shah Masood.

  19. @Hindi chini bhai bhai
    Some more fyi for you, The funding for starting a jasmine revolution in china, To free Tibet and to bring democracy to china. Ha Ha Ha,,. Good luck that money is hidden in japan's budget.. tell your govt to find it out too..

  20. Quite a lot of think that what you presented is available only for select few on contrary they don't know that these things are in FinMin website.

    @deshdaaz, don't be afraid... China & even India don't explains what the hidden finds are for... As Askhay explained, those reported (by Ajai) are more for civilian use than the Defence purpose.

    Is that a family trip (and a nice family photo too) at the expense of Indian Army ?

  21. If the govt. of india is masking the amount spent on defense under other headers to avoid international scrutiny,then why the hell would you want to let the entire world know this.Its being done for the country's security

  22. India has a much bigger army than 1.13 million

    India has man more aircraft and submarines than what is revealed by the govt

    IF India was so weak than WHY China and Pakistan are NOT attacking .

    Are they doing us a favour or they know our REAL strength

  23. Anonymous 12:07:

    Alas, it was not an Indian Army trip. It was an NDTV-trip to cover the Sino-Indian border meeting. The guy with me is Diwakar, my cameraperson. I paid for my wife's travel.

    Nice try.

  24. Anonymous 14:50:

    Are you for real? Sad that nut-case morons like you are running around free... and even sadder that they end up in my blog!

  25. Shukla Saab,

    1. Why include defense pensions into the total defense expenditure? How do defense pensions contribute to the "defense" of the country?

    2. Why are you including the internal security budgets in the defense head? If you do so, I am going to insist that you include the 250Rs a month I pay to my colony watchman. :-)

    3. The atomic energy budget is a different story.. Our weapons program has benefited by leveraging the civil infrastructure for atomic energy production. There is some overlap for sure, but we dont know how much.

  26. Dear Broadsword,

    Why have you not included the amount aalocated for education and health in defence budget. After all that money is spend in educating future soldiers or when they are on leave, take care of their health !!

    SSB, ITBP, CISF .. they are Defence !! Noble ideas, sir. You mean to say, Guarding Delhi Metro in air conditioned stations is Defence spending !!

    Roads not only takes soldiers but goddies too including those made in China !!

    On Top of that spending on Delhi police is hidden defence budget !!

    Which Army were you in ! No wonder, you are still there only !!

    So, like those MEA walas, you too !!

  27. @Hindi chini bhai bhai... Dear Idiot!! Please tell your forces to attack India, and then patiently watch how hard we hit back. If you remain alive(0.001%chance), please write your experience in this blog as a comment. Then tell what this blog informed you and what not.

  28. Ajai Saar,

    Wait, u said it was part of NDTV something? COME ON now, how can "U" associate yourself with the worst media house that is out there? You are certainly and blissfully not unaware of Niira Radia gate & Barkha Dutt's involvement. You also cannot claim you have not heard those audio tapes which u most definitely have. Also you would (or should) know, this is the media house that runs a "CM of the year" award farce by excluding most progressive(by any measurement index) state's CM(u bet, I am talking abt my CM Mr. Narendra Modi)

    Have seen Kiran Bedi associate herself with same media house recently.

    Saddening. Lowering the bar.

  29. Dear Sudeep,

    FYI it is normal practice to include defence pensions in the calculation of any country's defence budget. And internal security spending as well. Nothing radical about what Ajai is doing.

  30. To the best of my knowledge the "Special Projects" comes under the Capital Expenditure of the Air Force. Wonder how the money under this head is utilised for nuclear submarine. You may like to revisit your point for sake of objective dissemination of information.

  31. Hi Deshdaaz,

    The goal is to enhance national security. If NDTV is giving an avenue for bringing defence issues to the public consciousnes then the opportunity should be used regardless of what their other biases are (and I do think they are biased but thats irrelevant to the discussion here).

    Lets use any and all means to tackle our critical national security issues. And nothing wrong with wives accompanying respected journalists either, raises public awareness which is sorely needed!To be encouraged methinks.

    I dont know if any of you have ever seen the Remembrance month in the UK...a sea of red poppies to show support for their armed forces on almost everybody's lapel including ALL MPs and news casters, events,and coordinated nationwide 2 min silence across the country including in stock exchnages and bank trading floors during peak trading hours!

    Compare that to Armed Forces Flag Day in India...saddening. Lets not even talk about the US and ofcourse our dear friends the Pakis and Chinese!

    I'd say lets encourage any effort to bring national security and armed forces to the national consciousness.


  32. Bunch of fools talking crap,blah blah blah.

  33. Dear Ajai,

    Any chance you can block this "anonymous" numbnut. I visit your blog for some intelligent analysis, as oposed to the other nonsense in the public domain, and this fool rambles nonsense and wastes a few minutes of my life.


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