Part 5: Defence Secretary says India can make do with a defence spend of 2% of GDP - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Sunday, 2 April 2023

Part 5: Defence Secretary says India can make do with a defence spend of 2% of GDP

“Guns versus Butter” 

The concluding part of a 5-part series on the Standing Committee on Defence report, which says that India will not be able to absorb more defence funding 

 

By Ajai Shukla

Business Standard, 3rd April 23

 

The 35th Report of the 17th Lok Sabha’s Standing Committee on Defence, which was tabled before Parliament on March 21, reveals that successive defence budgets from the Financial Year 2018-19 (FY19) to the most recent one – for FY24 – have steadily increased in real terms, but decreased as a proportion of the national economy (gross domestic product, or GDP).

 

Defence allocations have also decreased steadily as a percentage of the central government expenditure (CGE) each year.

 

“The Committee has been apprised that the total Defence Budget (including MoD (Civil) and Defence Pensions) is ₹ 5,93,537 crore for FY24, which is 13.18 per cent of total Central Government Expenditure (CGE) and 1.97 per cent of the GDP for FY24,” said the report.

 

Defence allocations from 2018-19

 

(in Rupees crores)

 

2018-19 (Actual)

2019-20 (Actual)

2020-21 (Actual)

2021-22 (Actual)

2022-23 (RE)

2022-24 (BE)

 

 

 

 

 

 

 

Total Defence Expenditure

4,03,457

4,52,996

4,84,736

5,00,681

5,84,791

5,93,538

 

 

 

 

 

 

 

Central Government Expenditure (CGE)

23,15,113

26,86,330

35,09,836

37,93,801

41,87,232

45,03,097

 

 

 

 

 

 

 

Defence Spending as percentage of CGE

17.43%

16.86%

13.81%

13.20%

13.97%

13.18%

 

 

 

 

 

 

 

Total GDP

1,88,99,668

2,00,74,856

1,98,00,914

2,36,64,637

2,73,07,751

3,01,75,065

 

(3rd RE)

(2nd RE)

(1st RE)

(PE)

(1st AE)

 

 

 

 

 

 

 

 

Defence Spending as percentage of GDP

2.13%

2.18%

2.4%

2.12%

2.14%

1.97%

 

 

 

 

 

 

 

Note: GDP figures from FY 2018-19 to 2022-23 are as per Economic Survey 2022-23

1.6-Components of GDP at Current Prices and for FY 2023-24 are from Budget at a Glance (2023-24).

CGE figures for 2021-22(Actuals), 2022-23 (RE) and 2023-24(BE) are as per Budget at a Glance (2023-24)

BE= Budget Estimates, RE=Revised Estimates, PE = Provisional Estimates, AE= Advanced Estimates 

 

The Ministry of Defence (MoD) also told the Standing Committee on Defence that the capital budget for FY24 amounted to approximately 17.12 per cent of the total capital spending of the central government. 

 

When the Standing Committee asked the MoD for data on defence spending by other countries of relevance, the ministry submitted: “A like-to-like comparison of defence spending vis-à-vis that of other countries is difficult… Nevertheless, based on inputs from Stockholm International Peace Research Institute (SIPRI) military expenditure database, data on defence budget in respect of neighbouring countries and some advanced countries, including defence spending as percentage of their GDP and share of government spending, is given below (see table graphic).”

 

Defence spending by other countries

 

(In current US million dollars)

Country

2019

2020

2021

Defence spending

Percentage of GDP

Percentage of govt exp

Defence spending

Percentage of GDP

Percentage of govt exp

Defence spending

Percentage of GDP

Percentage of govt exp

 

 

 

 

 

 

 

 

 

 

China

(240,333)

(1.73%)

(4.91%)

(257,973)

(1.80%)

(4.75)

(293,351)

(1.74%)

(5.03%)

Pakistan

10,388

4.11%

18.70%

10,395

4.03%

17.44%

11,305

3.83%

17.82%

USA

734,344

3.43%

9.60%

778,397

3.72%

8.20%

800,672

3.48%

8.32%

Russia

65,201

3.83%

11.40%

61,713

4.26%

10.59%

65,907

4.08%

10.79%

UK

56,851

1.98%

5.17%

60,675

2.24%

4.56%

68,366

2.22%

4.66%

Figures in (brackets) are SIPRI Estimates;  Source: SIPRI Military Expenditure Data Base” 

 

Justifying India’s sub-2 per cent level of defence spending, the defence secretary told the Standing Committee that, in accordance with global norms, governments usually spend three per cent of GDP on defence, two per cent on healthcare and three per cent on agriculture.

 

“Three per cent of the GDP will be around ₹ 10 lakh crore, if we take our next year’s GDP to be around US $3.2 trillion. The MoD may not be able to absorb three per cent of the GDP. We may not require that much. What is required for the defence ministry has (already) been allocated.” 

 

The defence secretary was asked whether India was spending adequately on developing border infrastructure that could compare with neighbouring countries. He responded: “Infrastructure is a very important factor in winning war. A very long-term plan has been prepared. It is being revised every year for border infrastructure. As you see, under Udaan Scheme we are building several airfields, airport all along the border and also in the interior of the country. We are developing our infrastructure like never before.”

 

When asked about what steps were contemplated for achieving integration among the three services and the creation of integrated theatre commands (ITCs), the MoD responded in writing. 

 

“Deliberations on reorganising the armed forces into ITCs are in progress. The ITCs will facilitate better coordination and integrated application of force which will enhance operational efficiency and optimize resource utilisation. The likely benefits will be: Enhanced operational effectiveness; optimal utilisation of resources; synergy in capability development and (the use of) emerging defence technologies, (such as) next-generation weapons, artificial intelligence, disruptive technologies etc.,” said the MoD.


1 comment:

  1. The debate is based on a normative approach. Somewhere it needs to address the specifics of future. Both short term and long term objective of Defence of India.

    ReplyDelete

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