India's defence cost: High on personnel and low on modernisation - Broadsword by Ajai Shukla - Strategy. Economics. Stuff.

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Thursday, 30 April 2020

India's defence cost: High on personnel and low on modernisation

SIPRI is incorrect; India is world’s 5th largest defence spender, not 3rd largest, Russia and Saudi Arabia spent more last year

By Ajai Shukla
Business Standard, 1st May 2020

A well-respected Swedish think tank, which announced on Monday that India was now the world’s third-biggest military spender, appears to have overestimated Indian defence spend.

In making this determination, the Stockholm International Peace Research Institute (SIPRI) has put India’s defence spend for 2019 at $71.1 billion, behind top spender USA ($732 billion) and China ($261 billion), but ahead of Russia ($65.1 billion) and Saudi Arabia ($61.9 billion).

However, the most recent Indian budgetary figures (revised estimates) put Indian defence spending for 2019-20 at Rs 448,820 crore, or about $59.4 billion. That actually puts India at fifth place, behind both Russia and Saudi Arabia.

It is unclear how SIPRI has arrived at a figure of $71.1 billion. The lower Indian budgetary figures include all aspects of defence spending, including salaries and defence pensions, the civilian establishment of the ministry of defence (MoD), the Coast Guard and the Border Roads Organisation.

SIPRI is also incorrect in stating that India spends 2.7 per cent of its Gross Domestic Product (GDP) on defence. The most recent figure for the year 2019-20 was 2.18 per cent of GDP.

However, interesting findings are thrown up by a Business Standard analysis that compares Indian defence spending (2020-21 budget figures) with five other countries – the US, China, Russia, UK and Pakistan. 


India allocates by far the highest percentage of its defence budget on personnel costs, with a hefty 59 per cent going on salaries and pensions. Even the US and the UK, which pay their soldiers relatively lavishly, spend only 38 per cent and 30.6 per cent on personnel costs.

Unsurprisingly, the heavy outgo on personnel costs results in India having the lowest percentage spend on equipment modernisation, i.e. capital expenditure. While China and the UK spend 41 and 42 per cent of their defence budgets on modernization, and even Pakistan spends a healthy 37 per cent, India can spare no more than 25 per cent of its defence budget on capital expenditure.

Countries like the UK plan equipment modernization for a ten-year window, identifying exactly what weapons platforms they need to replace and allocating the funding for procuring replacements. 

In contrast, India’s 15-year Long Term Integrated Perspective Plan (LTIPP) is an endless wish list that the Budget cannot hope to support, since there are no priorities identified, nor any alignment of requirements with future budgetary means.

India is ahead only of Pakistan in the amount of money spent on each soldier each year, including salary, equipment and training costs. While the US spends over half a million dollars per soldier and the UK spends $367,000, India spends a mere $43,000 per individual. As a consequence, the Indian military is a manpower-heavy throng that is poorly armed, equipped and trained.

While China shows up well behind the US on almost every count, many defence analysts argue that China’s expenditure figures are misleading. These figures use conventional currency conversion, without adjusting for purchasing power parity (PPP), even though China builds most of its equipment indigenously rather than buying them at dollar prices from the international arms bazaar.

Calculating from a PPP perspective, scholars such as Peter Robertson, professor at the University of Western Australia, put China’s real military spending, as an equivalent of US spending, at $455 billion – not far behind the actual US spending of $732 billion.


4 comments:

  1. Hi Col S,
    I submit that the role of the armed forces of the UK and USA is power projection and combat, pure and simple, with a minor role in disaster management and humanitarian tasks.

    The role of the armed forces in India is a bit more nuanced than that. In addition to power projection and combat when called upon, they are also part of the the hidden mesh of sinews that hold the nation together, in defiance of all the forecasts that India would fall apart soon after independence. This needs more people than equipment.
    Jai Hind

    ReplyDelete
  2. India's military is poorly trained ?
    Do you care to explain ?
    Is this what you have to say, when a colonel rank officer is put through a military academy ( 2 in your case), YOs, DSSC, JC, SC, + a no. of other arm specific courses ?
    And, still, the likes of you have to quit, possibly seeing no future ?
    This is the mumbo jumbo, that idiots like you dish out everyday, without justifying, that gets you called as #Prestitutes.

    ReplyDelete

  3. In a fascist state, difference between state, party, nation and leader melts. Isn’t it, only a year back we hear Modi ji ki Sena in a election rally?

    Officially and an national consensus, we pat our back for Defence Forces operations against terrorists - Uri & Balakot and have a massive deployment of Defence Forces in a police action in Kashmir. Is this the Strategic role of Defence Forces for a nation wanting to be the 3 rd largest economy? K

    Without a technology base and a Indigenous Industrial complex no nation can climb the economic ladder. Unfortunately, under Modi , we have outsource Defence Preparedness to equipment buying alined to securing Veto’s in security council while giving lip service to Make in India.

    Unlike China, who has developed capability to a plan since 2008, reduced the size of its Defence Forces but give it teeth, we have imported stuff with no coherent plan or maintenance capability. Every 40% available on these imported equipment is considered excellent. Ie just to meet availability due to maintenance, India need 2 or 3 time the equipment compared to China, who also design and makes fit for purpose equipment in pursuance to its need/ doctrine ( Aircraft Killer Missiles Target US 7th fleet).

    You make a good point wrt PPP on Chinese Defence Budget. But long term availability and life cycle cost will makes PLA even more frugal and lethal. Their Hyper Sonic capability now under deployment and Cyber will make them decades ahead of us.

    If India has to raise and catch up in 15 -20 years, we need a much smaller Defence Forces alined to our Strategic Objectives asap at the tactical and military planning level. This also needs to be alined at Strategic and Political level as a collision of democracies with USA and JAPAN. It has to be a pragmatic technological alliance of democracies and with substantial rethinking of Security Strategy & Defence Forces role in popular discourse.

    ReplyDelete
  4. First of all, Currently, India is the second-largest army in the world and moreover. India has held a tag of the peaceful nation for a very long time so maybe they had tried to build that reputation by spending more on military personnel rather than the modernization of equipment. Furthermore, if you are comparing India with Pakistan on a military basis then I guess you need to check out on other spendings as well & as much as I know Pakistan does not have anything except its military & we all know how military meddles in the politics of Pakistan.

    ReplyDelete

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