India’s Defence Expenditure: Higher spending doesn’t mean better deterrence

India was the third highest in the SIPRI list of top military spenders for the last couple of years. However, India has now slipped down to fourth position.

Defence expenditure is a ‘contested concept’ in India with more votaries for enhanced expenditure than those standing for its optimisation. The former often crib about the budgetary allocations being far less than satisfactory. This proposition gets support from strategic experts, service veterans, members of the journalistic fraternity and even the departmentally related standing committee of the Parliament on Defence. There is little space for the counter-narrative of India’s defence expenditure being just and appropriate. However, inferences from the just published SIPRI Factsheet on ‘Trends in world military expenditure, 2022’ should add argumentative weight to the counter-narrative.

Upstaged By Russia

India was the third highest in the SIPRI list of top military spenders for the last couple of years. However, India has slipped down to fourth position in the latest SIPRI Factsheet. This is, at best, an ephemeral position since Russia, which has upstaged India, is engaged in a war with Ukraine. With or without the Ukraine War or any other wars, Russia does not have a large GDP base to fund a higher level of defence expenditure in the long term. India would, therefore, reposition itself as the third-highest military spender in due course and the lead position would remain so in the near future. Unfortunately, pessimists at home ignore India’s high ranking and still clamour for more budgetary allocations for the defence sector.

A notable feature of the SIPRI Factsheet is that many advanced industrial economies having large or comparable GDP sizes like the UK, Germany, France, South Korea and Japan are placed below India and suffer from substantial defence expenditure gap. For instance, at $81.4 billion in 2022, India’s defence expenditure is at least 20 per cent more than the UK ($68.5 billion); around 50 per cent more than Germany ($55.8 billion) and France ($53.6 billion); and almost double of South Korea ($46.4 billion) and Japan ($46 billion). Other established military powers like Italy, Australia and Israel are at a significant statistical distance from India, accounting for one-third or one-fourth of its defence expenditure figures. Most importantly, India spends eight times more than Pakistan ($10.3 billion) on defence.

Spending Ratios

While the above statistical presentations are happy figures by all standards, many other derivatives would place India’s defence expenditure in a further comfortable position. First, while India accounts for 3.6 per cent of global defence expenditure, it accounts for 3.4 per cent of global GDP on a nominal basis. Countries like Germany still stand above India in GDP rankings but spend quite less than India. Similarly, India’s share in global trade is quite less at 1.8 per cent and stands at a poor 18^th position in the list of trading nations in 2023. These are a few representative global figures cited here to establish that India is spending comparatively more money on defence than many developed countries and leaders in international economic relations.

Second, while defence expenditure accounts for 2.2 per cent at the global level, it is 2.4 per cent in the case of India (SIPRI estimates). Very few countries dedicate more budgetary resources in relative terms to their defence sector such as the US (3.5 per cent), Russia (4.1 per cent), Israel (4.5 per cent), Qatar (7 per cent), Singapore (2.8 per cent), Pakistan (2.6 per cent), Colombia (3.1 per cent), Algeria (4.8 per cent), Kuwait (3.3 per cent) and Greece (4.8 per cent).

Third, in terms of decadal growth for the period 2013-22, India recorded a 47 per cent growth in defence expenditure. Only China (63 per cent) and Canada (49 per cent) have recorded larger growth rates in the top fifteen countries in the SIPRI factsheet. Further, only eight countries in the top forty countries had a higher growth rate of defence expenditure. The global average growth rate during this period was 19 per cent. Certainly, public policy imperatives have been more sensitive to India’s defence expenditure management in the last ten years.

Personnel Expenses

And yet, the protagonists clamouring for more defence expenditure may blissfully ignore the bitter pill mentioned in the SIPRI Factsheet as responsible for higher defence expenditure. Accordingly, ‘personnel expenses (e.g., salaries and pensions) remained the largest expenditure category in Indian military budget, accounting for around half of all military spending’. Such a high level of expenditure on personnel expenses does not find mention in any other country’s defence expenditure discussion.

Facts and figures in the SIPRI Factsheet notwithstanding, many protagonists would still have pangs of doubts about India’s capabilities to handle the China challenge, the official defence budget of which is at least 3.5 times that of India. While there are indeed serious threats on the China front, defence expenditure is just one of the aspects of building up India’s military capabilities. As the SIPRI Factsheet shows, many established military powers have built up their capabilities with far lesser financial resources than India. Probably, we can learn a few lessons from these countries.

Bhartendu Kumar Singh is in the Indian Defence Accounts Service. Views are personal, and do not represent the stand of this publication.