India’s 2008-2009 Military Budget
China’s 2008 military budget and its 2-decade string of uninterrupted double-digit budget growth have been attracting a great deal of attention lately. The official figure is now $58.8 billion, but there is no accountability or transparency, and outside estimates place the real figure between $100-180 billion.
India’s democratic, accountable government presents fewer transparency issues, and the simultaneous growth of its economy and of pressures orchestrated by China have resulted in a rising military budget of its own. The rise has been slower, but the recent 2008/09 budget proposes from Rs 960 billion in 2007/08 to Rs 1056 billion in 2008/09 (a 10% hike, from about $24 billion to about $26.6 billion at USD exchange). That’s hike of about 10%; compare to India’s 2007 consumer price inflation index of 5.51% in 2007.
Of that budgetary total, Rs 480 billion has been earmarked for the purchase of military hardware, as opposed to pay, pensions, maintenance, and the other expenses of running a military. That’s a rather sharper hike of almost 23.3% over 2007/08. The question is whether India will be able to spend it…
In light of India’s ongoing modernization projects, from IL-76 derived Phalcon AWACS aircraft, to fighter jets, to an additional 6 submarines, a number of observers doubt whether even a 10% increase will be sufficient to fund all of India’s announced and anticipated programs. This is not an unusual problem, as countries like the USA and Britain face the same dynamic, where it often results in very sub-optimized spending that attempts to preserve all programs but only ensures that the amount of equipment received for dollars spent falls sharply. Finance Minister Palaniappan Chidambaram has attempted to allay those concerns in the near term, and is on record as saying to Parliament that “Any further amount that is needed for the defense forces, especially for capital expenditure, will be provided” during this budget period.
India’s Ministry of Defence will only require that money, however, if it makes decisions and signs contracts. If it doesn’t, the budgeted figures won’t matter. All of the problems described in DID’s May 2005 “India’s Defense Market: Obstacles to Modernization” reportedly remain, and some observers believe they may even have worsened. For instance, in 2007/08 India’s Defence Ministry could only spend Rs 925 billion of its budget, leaving Rs 35 billion unspent. Most of the difference can be found in capital estimates, which only spent Rs 377.05 billion of over Rs 419 billion.
C. Uday Bhaskar, former director of New Delhi’s Institute for Defence Studies and Analyses, as reported by Reuters:
“We know that physical outlays don’t get translated into outcomes… They have a long shopping list and every year all they have been doing is returning money as files have not moved.”
The article adds more comments, including Ajai Sahni of New Delhi’s Institute for Conflict Management:
“The bureaucratic system has become unresponsive, there is no urgency and they are not looking at defence as a national issue… There is no missionary purpose anymore.” …analysts say civil servants are afraid of signing contracts fearing more controversies.”
Sources: India Defence | Hindustan Times | Times of India | New Kerala | Defense News | Reuters.
Additional Readings:
- SIPRI’s figures only reach to 2006, but may provide a useful look at growth and trends within India from 1988-2006.
- “India’s Defense Budget and Counterterrorism: A Thought.”
