Source: The post India’s declining defence budget has been created, based on the article “For Nirmala Sitharaman, a wishlist from the armed forces” published in “Indian Express” on 30th January 2025
UPSC Syllabus Topic: GS Paper3-Government Budgeting.
Context: The article discusses India’s declining defence budget as a share of government spending and GDP. It highlights inadequate capital allocation for military modernization and an imbalanced distribution among the Army, Navy, and Air Force. It also criticizes unclear accounting practices in defence expenditure.
What is the Trend in India’s Defence Spending?
- Defence spending as a share of government expenditure is declining. It fell from 13.81% in 2020-21 to about 13% in 2024-25.
- As a percentage of GDP, it dropped from 2.4% in 2020-21 to 1.9% in 2024-25.
- The capital budget increased from ₹1,31,697 crore in 2020-21 to ₹1,72,000 crore in 2024-25, averaging 7% annual growth.
- Despite rising capital spending, modernization efforts remain underfunded, affecting military preparedness.
How Does India’s Defence Spending Compare Internationally?
- The International Monetary Fund (IMF) and World Bank consider up to 3% of GDP on defence as acceptable.
- NATO members are required to spend at least 2% of GDP.
- The US spends more than 4%, while China, like India, spends less than 2%.
How is the Capital Budget Distributed Among the Services?
The budget distribution does not match the needs of the services:
- Army (84% of total personnel): Receives only 22-28% of the capex budget, limiting its ability to buy weapons, helicopters, and protective gear.
- Navy (5.5% of personnel): Gets 31-36% of the capex budget but lacks enough warships and submarines to secure India’s coastline and sea trade routes.
- Air Force (10.5% of personnel): Receives the largest share (38-45%) because aircraft are very expensive. For example, 36 Rafale jets cost $8.7 billion. Locally made Sukhoi-30MKI jets cost ₹100 crore more per unit than imported ones.
- The total defence budget is divided as follows:
- 57% for personnel costs (30.7% salaries, 22.7% pensions, 4.1% for civilian organizations).
- 15% for operations and preparedness.
- 27.7% for capital expenses. Most modern militaries spend 50-60% on modern equipment, but India spends much less.
What Issues Exist with Defence Budget Accounting?
- Unclear Budget Categorization: Allocations for the Border Roads Development Board (BRDB), Coast Guard (CG), and Jammu & Kashmir Light Infantry (JAK LI) are placed under the MoD (Civil) head instead of the respective services.
- Lack of Transparency: Earlier, capital budgets for the Army, Navy, and Air Force were separate. Now, they are grouped together, making it difficult to track specific allocations.
Question for practice:
Discuss the trends and challenges in India’s defence spending, including its allocation among services and comparison with international standards.
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