As India buys new equipment, capital expenditure must rise
It is not surprising to find India among the world’s top five military spenders, given that the country has been grappling for some time with the urgent requirement of modernising its armed forces to cope with a challenging security environment. The Stockholm International Peace Research Institute (SIPRI) has placed India behind only the US, China, Saudi
Arabia and Russia in terms of defence spending. India’s military expenditure last year was about $63.9 billion, far less than the spending of the US ($610 billion) and China (an estimated $228 billion) but more than the spending by countries widely seen as global military powers, such as the UK ($47.2 billion) and France ($57.8 billion).
India faces a shortage of combat aircraft. It also needs new warships, aircraft carriers, submarines, artillery and a host of equipment for the army. However, military hardware is not bought off the shelf. It is built and supplied over several years, and payments too are made over an extended period. Therefore, as India inducts more new equipment, the outlay for capital expenditure should increase over the coming years. This will also require sustained growth of the GDP so that adequate funds can be set aside for big ticket defence deals. In fact, the defence budget to GDP ratio for 2018-19 is 1.49%, the second lowest since 1950, while most experts believe it should be around the 3% mark.
Reports on defence spending such as the one by SIPRI do not always present the complete picture. For instance, a chunk of India’s defence budget goes towards the salaries of around 1.4 million serving personnel and pensions for some two million veterans. In 2017 67% of the defence budget went towards these heads and only 33% was spent on new acquisitions of hardware. There is a need for a healthier ratio here, which can be achieved by increasing the outlay for capital expenditure. It may be imperative for the government to hike the allocation for capital expenditure if it wishes to go ahead with the speedy acquisition of new platforms such as Predator drones from the US. This is all the more necessary to keep the military prepared for all eventualities, especially challenges from China and Pakistan.