Bang for Buck: India’s Defence Expenditure in Wider Perspective
(Source: Institute for Defence Studies and Analyses; issued July 10, 2020)
This study argues that India’s rising military expenditure and its improved ranking as the world’s third-largest military spender is largely due to a hefty increase in manpower cost.

It juxtaposes India’s military expenditure with that of other major/relevant military spenders to gauge the pattern of expenditure including in relation to personnel and non-personnel expenditures.

It also argues that while the current resource constraints facing the Indian defence establishment need to be addressed through an additional increase in allocations, the long-term sustainability of India’s military expenditure lies in addressing the bulging manpower cost.

Any manpower reform, however, needs to take cognisance of India’s unique security requirements and the morale of the armed forces.

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The 2019 military expenditure database of the Stockholm International Peace Research Institute (SIPRI), released in April 2020, ranks India third, behind the United States (US) and China, and ahead of Russia, France and the United Kingdom (UK) among other major defence spenders.1

The latest military spending ranking for the world’s fifth-largest economy is an improvement of one place over the previous year and a jump of six places since 2009.2 As per the SIPRI’s database, India’s military spending of $71.1 billion in 2019 amounts to 2.4 per cent of the country’s gross domestic product (GDP) and 3.7 per cent of the total global military spending of $1.9 trillion. The database also reveals that among the top-10 spenders, India had the highest real term (or inflation adjusted) increase of 30 per cent during 2014-19, followed by 25 per cent each for China and Germany (see Annex I). The US, which outspends the next 10 biggest military spenders combined, had seen a marginal increase of seven per cent during the same period.3 SIPRI attributes India’s latest rise in ranking to “tensions and rivalry with both Pakistan and China” among other major drivers.4 In the previous year’s assessment also, SIPRI had attributed rise in India’s military expenditure to the same major drivers.5

Is the SIPRI analysis correct? To what extent has the rivalry with Pakistan and China influenced India’s defence budget and in what manner? In other words, which segments of India’s military expenditure account for major increase? How does India’s military spending fare with that of other major spenders or countries relevant to India?

This study deals with these questions through an examination of defence expenditure of India and some relevant countries that include the US and its major North Atlantic Treaty Organisation (NATO) allies, and India’s two neighbours, Pakistan and China.

In so doing, it examines the pattern of expenditure over a longer time period, wherever needed, and juxtaposes them with some other major/relevant military spenders. The pattern of expenditure is examined with a particular focus on personnel and non-personnel expenditures.


Click here for the full report, on the IDSA website.

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