In the 2011 Union Budget presented yesterday in the Indian Parliament, the Finance Minister announced an 11% hike in the defense budget during the next fiscal year. India has now set the defense budget for FY 2011-12 at $36.28 billion. Forty percent of the budget would be spent on capital expenses, while the rest goes towards maintaining the Indian Army, which is one of the largest in the world.
The significant rise in defense spending could be attributed to the increasing military capabilities of India’s two immediate neighbors with whom it has fought wars previously – China and Pakistan. Over the last few years China has been rapidly expanding its defense spending, and it has grown approximately 13% annual on an average since 1989. According to some estimates, China’s defense spending in 2010 was about $100 billion. The size of its army is almost twice that of India’s and is much better equipped.
On its western border, Pakistan has been going through a rough phase of economic, political and social upheaval, while its military budget keeps increasing. Last year it increased its defense spending by 17%, partly to aid U.S. in the war on terror. This is in addition to the economic and military aid the U.S. provides Pakistan for the same purpose. Over the last few weeks there have also been news of a rapid increases in Pakistan’s nuclear arsenal, with it set to overtake Britain as the fifth largest nuclear power. Pakistan is building its fourth plutonium reactor and has more than 100 deployed nuclear weapons. Not to mention that the Pakistan Army and the ISI policies have traditionally been India-centric, with a majority of the forces deployed along the Indian border.
Under such external circumstances and the need to upgrade and procure equipments and machinery, the Indian defense spending increase seems well placed. India has a few procurement deals lined up for the year, but it would need to do a lot more to match up to China’s standards. As its primary competitor not only economically, but also for geopolitical influence particularly in East Asia and Africa, India needs to speed up and match up its defense capabilities with those of China. A strong military would be essential to counter any potential threats from an unstable AfPak region.
Circumstantially as important as it may be, the increases in defense spending of all the three countries contribute to the arms race in the region taking it to the edge of volatility. While it would not be prudent to expect a decrease in expenditures or an end to military procurements and upgrades, the three countries need to make concentrated efforts to reduce the need for the increase in military spending.