India’s defense budget saw a modest growth of 5.5% as Prime Minister Narendra Modi’s government focused instead on social sector spending and tax cuts ahead of national elections due next year.
(Bloomberg) — India’s defense budget saw a modest growth of 5.5% as Prime Minister Narendra Modi’s government focused instead on social sector spending and tax cuts ahead of national elections due next year.
Overall, military spending increased to 4.33 trillion rupees ($52.8 billion), up from 4.1 trillion rupees a year ago, according to the federal budget unveiled on Wednesday. India’s expenditure is a little over a quarter of China’s defense spending which is estimated to be $293 billion.
The rather tiny increase raises questions about New Delhi’s ability to buy new equipment and use cutting edge technology as its borders with China and Pakistan remain unstable, stretching its existing resources. India is among the world’s top five defense spenders but most of the funds go toward paying the salaries for its over 1.4 million-strong military as well as pensions.
The military was hoping for a larger increase in the allocation for this financial year.
The cumulative budget gap between funds allocated and the military’s requirements for the four-year period starting from 2017 is a staggering 7.37 trillion rupees. The armed forces were expecting a minimum allocation of 4.32 trillion rupees this year, according to government data.
The military has repeatedly told the government that consistent shortfalls in the defense budget has led to serious capability gaps that affect operational preparedness.
This time around, the formal allocation for defense pensions dipped by about 10% to 1.38 trillion rupees from the earlier 1.53 trillion rupees, indicating that government will have to provide for additional funds to meet this shortfall later in the year.
India’s defense pension budget comes at the cost of funds available to buy new weapons and inducting cutting edge technology. Prime Minister Modi had hiked pensions of military veterans in 2014 in response to long-drawn protests across the country.
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“A substantial increase in taxes was ruled out with nine state assembly elections due this year, and parliamentary polls in 2024,” said Amit Cowshish, a former financial adviser to the Defense Ministry. A major increase in defense spending was not “viable” or expected, he added.
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