Friday, January 22, 2010

India's Arms Buildup: Guns Versus Bread

Guest Post: Col.(Retd) Pavan Nair

Considering the large size of our population, its high rate of growth, and millions living below the poverty line, the Government faces serious challenges of resource mobilization to provide adequately for satisfying even the minimum needs of our people. It is apparent that significant increases in allocations for defense in the future can be envisaged only by constricting the flow of funds to the social development sectors.

26 August, 1996, N. N. Vohra, Former Defense Secretary

(In a Foreword to ‘India’s Defense Budget and Expenditure Management’ By Amiya Kumar Ghosh, Lancer Publishers, New Delhi, 1996. The outlay on Defense during FY 1996-97 was Rs 29,505 crores)

The Kargil Review Committee Report, Para 9.21. - - - Some questions have been raised about the impact of declining defense expenditure on the nation’s capacity to counter effectively the Kargil intrusion and, in particular, the preparedness of the jawans for high altitude conflict. The evidence available to the Committee does not show that a paucity of resources was per se responsible for any lack of preparedness for the Kargil conflict.

Para 9.24. It is obvious, however, that over the years actual defense expenditure has been below the amount required by the defense forces to perform efficiently the tasks allotted to them. This has affected the process of modernization and has also created some unacceptable operational voids. Given the country’s resource constraints, the scope for enhancing defense outlays is somewhat limited without tightening up fiscal discipline elsewhere and ensuring a high growth rate of 6-7% for the economy. Hence, the defense Services must seek to extract the maximum value from each defense rupee. This will call for some drastic measures like restructuring of the defense forces, improving cost effectiveness of manpower, retraining and redeployment, dispensing with avoidable and unnecessary expenditure, rigorous prioritization, and focusing resources in areas likely to enhance the effectiveness of the defense forces in meeting the emerging challenges to the country’s security. In other words a total reform of defense structure, its interface with civil government, defense production and procurement is called for.

(Kargil Review Committee Report 1999, emphasis added. The outlay on Defense during FY 1999-2000 was Rs 45,694 crores)

The Mumbai terror attacks have given an entirely new dimension to cross-border terrorism. A threshold has been crossed. Our security environment has deteriorated considerably. In this context, I propose to increase the allocation for Defense, which is a part of non-plan expenditure to Rs.1,41,703 crores. This includes an amount of Rs 54,824 crores for capital expenditure. Needless to say, any additional requirement for the security of the nation will be provided for.

16 February 2009 Pranab Mukherjee


Defense economics has not been a subject for serious study or debate in Indian academic or military circles. Little or no literature is available with the exception of a few books in the area of defense accounts. Economists and activists have long argued that defense related expenditure needs to be curtailed. Opinion is clearly divided between the developmental lobby and strategic thinkers who wield influence with the political leadership. This paper will attempt to make a realistic assessment of current levels of defense spending by evaluating the efficacy and intensity of military expenditure. Indeed, some arguments have been made before but bear repetition in the current scenario. Parliament passes the defense budget with little or no discussion. The media is largely ignorant or chooses to ignore the issue of defense spending. The view across the political spectrum and indeed the strategic community is that any exercise to limit defense spending amounts to compromising national security and is therefore not a viable consideration. Whilst it is true that development cannot take place in an insecure environment, defense expenditure (DE) in a developing country directly impacts the outlay on social spending. The "guns versus butter" argument is valid especially when the guns (and missiles) are not buying the security the country needs against asymmetrical threats from within and without.

In the Indian context, DE pertains to the external defense of the country by the regular armed forces. Expenditure on internal security, law and order, border management and fencing, coastal security and intelligence comes under the purview of the Ministry of Home Affairs. Border roads are taken care of by the Ministry of Surface Transport and the Indian Coast Guard comes directly under the Ministry of Defence (MoD). The defense budget forms the single largest item of discretionary expenditure. The outlay on defense has seen more than a three-fold hike in the decade after the war in Kargil from Rs 45,694 crores in 1999-2000 to Rs 1,41,703 crores in 2009-10 (All figures pertaining to DE have been taken from and are budget estimates unless otherwise stated). During this period there has been no accretion in force levels except for the raising of an additional corps and command headquarters from within the manpower ceiling of the army and a few units and formations for manning missile systems which can be used to deliver nuclear warheads. Two mountain divisions have recently been sanctioned for deployment in the North-East but the financial impact will be felt only when the formations complete raising. Force multipliers like UAVs (Unmanned Aerial Vehicles) and satellite imagery have become available. Electronic surveillance has become available down to unit level. The import route has been used extensively for modernization of the three services. It is contended that excessive dependence on imports and exercising the nuclear option in 1998 has taken military related expenditure to unsustainable levels.

The three-fold increase in expenditure in the last decade is not in real terms since inflation and the depreciation of the rupee have to be taken into account. In real terms, this amounts to a 75% rise assuming an average annual inflation rate of 12% and depreciation of 10.5%. This is a substantial hike considering the fact that the decadal growth of military expenditure worldwide in constant 2005 US dollars till 2008 was 45%. This includes the expenditure on the global war on terror which has raised US defense related expenditure to its highest level since the Second World War (Stockholm International Peace Research Institute [SIPRI] Military Expenditure Database 2009,

India is in the top-ten list of military spenders while it stands at number 128 out of 177 countries in the 2008 UNDP Human Development Index. China, the second lowest in human-development in the military-spending list is ranked at number 81 ( Human security must surely form a part of national security. The situation on the internal security front has deteriorated considerably. This can be attributed at least in part to the poor human development parameters affecting hundreds of millions of citizens who eke out an existence at sub-human levels. India has the dubious distinction of being home to the largest number of indigenous terrorist organizations. State police forces are ill-equipped to handle insurgency or terror. The Naxalite threat no longer remains just a menace and needs to be dealt with at various levels and not merely as a law and order problem. Coastal security is practically non-existent. . This has become apparent after the unhindered ingress of terrorists using the sea route. There are several dimensions of security which cannot be ignored. Defense budgets seldom meet the requirement of any military. There are always better weapon systems, heavier caliber guns and more lethal aircraft to be procured. Nuclear warheads, missiles, delivery and command and control systems are prohibitively expensive. Internal security which has remained neglected for several years can also consume a large share of available resources. There is thus a need to balance expenditure on internal and external security while keeping both within reasonable limits. This may be stating the obvious, but it needs to be stated.

Finance Commission on Defense Expenditure
In its wisdom, the Eleventh Finance Commission (EFC) which submitted its report in June 2000 laid an upper limit of up to 3% of the GDP for DE. It is worth noting that the informal NATO guideline for DE is 2% of GDP, though several countries notably the US have crossed that limit. Para 4.17 of the EFC states, “- - aggregate defense expenditure could reach 3% of GDP by 2004-05. We would emphasize that while the required resources may be provided, all possible measures for securing economy in defence expenditure should be taken.” Official DE in 2000 was at 2.3% of GDP. The EFC also noted (Para 4.15) that the fiscal deficit was expected to fall to 4.5% of the GDP by 2004-05, thereby implying that the hike in DE over the next few years had been facilitated by the improved fiscal situation and other measures suggested by the EFC to increase the availability of funds for both capital and revenue expenditure.

The specified limit of 3% has been observed only by excluding several items like the cost of the MoD and the expenditure on military pensions which by itself amounts to 15% of the total defense outlay. Several other items like the Jammu and Kashmir Light Infantry (JAKLI, a regular regiment of the army consisting of thirteen battalions) and the Coast Guard are also excluded. A substantial part of the cost of the nuclear arsenal and allied systems is excluded. All para-military forces including the ones directly involved in border management are excluded. The Parliamentary Committee on Defense spends most of its time on personnel matters and resolving issues of protocol between the service chiefs and the defense secretary. The Committee looks at DE but beyond stating that DE should be pegged at 3% of GDP, it has nothing substantial to contribute. Clearly, parliamentary oversight and control seems to be missing. For several years, DE in aggregate has crossed 3% of GDP.

The Nuclear Dimension

The expenditure on the nuclear arsenal is an additional burden on the economy. It is immaterial whether or not this cost is included in the defense budget. C Rammanohar Reddy in an article in the Hindu published in 1999 states that a poor man’s arsenal could cost anything between 0.5% and 1% of the GDP per year for about ten years till all systems are fully deployed. The capital cost of developing, testing and deploying systems over a period of say ten or twelve years could be between 6% and 10% of the GDP with a recurring and maintenance cost element to be added separately. Assuming an overall cost of 8% of GDP, the total expenditure at current levels has crossed Rs 4,50,000 crores. This cost has been split over several years between the Department of Atomic Energy (DAE), the Department of Space (DOS), the Defense Research and Development Organiation (DRDO) and the army, navy and air force for delivery systems. The amount spent by each department or arm is not visible since it is merged with overall expenditure. It is therefore not possible to compute the current cost of nuclear deterrence, which for better or for worse forms an important leg of the country’s strategic posture. An assessment will however be made subsequently to arrive at the additional amount to be added to DE which currently includes the expenditure of the DRDO which has developed missiles and the cost of their deployment in the three services. Nuclear deterrence implies deploying air, land, sea and submarine based missiles besides delivery systems and command centers with communications and built in redundancy. India has also opted for an anti-missile system. The overall cost of the nuclear triad which includes nuclear powered submarines which are under construction and procurement has directly impacted available fiscal space and subsequently developmental spending.

As per the defense minister, India imports 70% of its weapon systems. These include delivery and data acquisition systems like aircraft, ships and submarines which are accounted for under conventional DE. India is the second largest importer of arms after China. Certain systems like the Airborne Warning and Control System (AWACS) has been procured primarily to provide early warning of a nuclear as also conventional attack. AWAC systems have been around for several decades and India is in the process of developing its own system. Having gone overtly nuclear has actually spurred the procurement of additional systems which could have been developed within the country in due course. Clearly, the option to go nuclear, besides its own costs has added to the expenditure on conventional arms. Nuclear protagonists often state that conventional spending is likely to reduce when nuclear deterrence is in place. This is certainly not the case in the sub-continent and is getting reflected in Indian DE. We need to look at what constitutes DE.

Defining DE

The Stockholm International Peace Research Institute (SIPRI) defines DE as the expenditure on armed forces (including strategic forces and military space applications), ministries and government departments engaged with the armed forces (defence accounts, estates, canteen), military accommodation, land and facilities, pensions, research and development, para-militaries trained and equipped like the regular army as well as military aid in terms of peace-keeping forces and equipment given to other countries. DE excludes the cost of civil defence, disaster relief and military aid received. This definition has been accepted by most countries across all continents with minor variations and forms the basis of reporting of military expenditure.

Developing countries tend to report lower DE since developmental aid is linked to the quantum of such expenditure. This is achieved by showing legitimate items of expenditure under several heads outside the defense budget. Costs of ministries and accounting departments are generally excluded. Expenditure on military pensions which amounts to 10% to 15% of official DE is excluded by several countries including India (since 1985) and Pakistan (since 2000). Arms imports can be paid for by barter or off the defence budget. Pakistan excludes capital costs. The Rupee deal concluded between India and Russia during the early nineties was primarily a defence deal but was shown as a bilateral commercial agreement. Defense equipment (tanks, guns, ships, aircraft) worth ten billion US dollars (at 1990 rates) was supplied over two decades in exchange for goods exported to Russia. The entire amount was added to the external debt. The Rupee deal was negotiated under favorable terms; however a substantial amount of money was excluded from legitimate DE for several years. The Rupee deal has run its course, so higher levels of expenditure have now started showing up in the defense budget.
The cost of military pensions in the current year is Rs 21,790 crores. This was the entire outlay on defense till as late as 1993-94 and excludes the further hike in pensions announced in the budget for personnel below officer rank amounting to Rs 2,100 crores. The cost of the MoD which includes the outlay on the JAKLI and the Coast Guard, as also the defense accounts department, canteen department and its own secretariat is Rs 3,170 crores. Both these items taken together (Defense Services Estimates, Civil) are debited to several sub-heads under the General Services head. The CPMFs involved in border management, an important aspect of external security (Assam Rifles, BSF, ITBP, and the Sashastra Seema Bal or SSB) cost Rs 11,397 crores. These forces come under the operational control of the army during war just as the Coast Guard comes under the control of the navy. This cost along with the cost of other para-military forces is debited to the Police sub-head within the General Services head. As stated earlier, it is not possible to compute the cost of the nuclear arsenal but post the nuclear deal, we are aware that 35% of reactors are for military use, therefore the cost to be added to the defense budget could be assessed by adding 35% of the budget of the DAE and DOS which is also responsible for the development and testing of longer range ballistic missiles and satellites for military purposes. This amounts to about Rs 4,456 crores. This is a conservative estimate. Thus the official defense budget amounting to Rs 1,41,703 crores excludes an amount of Rs 40,813 crores or 29% of the allotment. DE in aggregate amounts to Rs 1,82,516 crores which is above the 3% GDP limit specified by the EFC. Unfortunately, defence analysts ignore this aspect when discussing the defense budget. Splitting DE amounts to obfuscation and should be avoided since it can confuse planners and parliamentarians alike.
In addition, the cost of border fencing, border roads and military aid to several countries like Afghanistan, Tajikistan, Nepal and Bhutan running into thousands of crores is shown in the expenditure of various other departments and ministries. The fiscal deficit which is expected to hit an all time high of 6.8% in FY 2009-10 is bound to rise further since defense equipment worth over 20 billion dollars or 1.65% of GDP is already in the pipeline or has been cleared for procurement using the import route.
Defense Budgeting and Classification of DE
The British abandoned the system of budgeting being followed in India a few decades ago and adopted a functional system in which accounting is done not only by service but by command functionality. Thus ‘British Forces in Iraq’ is a separate head. The expenditure in each theater of operations is visible and can be assessed. If we need to check the expenditure say in the Siachen sector or on counter-insurgency operations in the Valley, it would need a major exercise. In fact, the first head of account in the British system is ‘Strategic Nuclear Forces’ under which each aircraft, ship, submarine and missile along with warheads and manpower is accounted for.

The current system of budgeting is purely incremental and depends on how much money the Finance Ministry can make available or how much pressure the defence minister can exert on his counterpart in North Block. This has resulted in ad-hoc allotments being made to the services which individually project inflated requirements which are never met. This becomes clear by observing flat-rate increases over the previous year’s budget estimates. There was a 10% hike in the budget estimates for DE for 2008-09 (Rs 105,600 crores) from 2007-08 (Rs 96,000 crores). Similar hikes have been made for several years. The unprecedented hike of 34.2 % this year over last year’s budget estimates is mainly on account of the implementation of the report of the Sixth Pay Commission. Revenue or recurring expenditure takes care of salaries and maintenance and like pensions is a fixed cost. This can be worked out in advance. It would be better if the MoD could indicate the amount of capital funding available service wise for modernization for say five years so that the service chiefs could plan accordingly. This can also take into account the expenditure on internal security and developmental schemes over the same period. This is an exercise which the National Security Council (NSC) should undertake. Larger procurements like the 126 multi-role combat jet aircraft deal could be factored in separately. Ideally, a long term perspective plan should be accepted in advance. Such plans exist on paper but have been ignored by governments across the board since inter-service priorities cannot be decided and resource-mobiliation is always a problem. The plans remain internal projections of the services made to the MoD.

Classification of DE as a percentage of the GDP does not bring out whether the money is being spent efficiently; or given a particular force level, is adequate or inadequate. It also does not reflect the growth of DE if GDP expands over a period of time. India has seen substantial growth over the past several years. Pakistan spends a higher percentage of its GDP on defense; however when we compare the combat potential of the two armed forces in terms of manpower, tanks, ships, aircraft and artillery, Pakistan’s unit spending per combat soldier or tank or ship is much lesser. This aspect is examined in a subsequent paragraph. Besides efficacy (bang for the buck), the intensity of DE (overall share or burden) does not get reflected in its representation as a percentage of GDP. It would be better to compare DE as a percentage of the total budget rather than central government expenditure. In this case, it emerges that whereas India and Pakistan spend between 15% and 25% of the total federal outlay, China spends about 7.5% (China’s National Defense 2008, White Paper on Defense, January 2009). Defense analysts question the transparency of Chinese DE but it must be stated that China’s human indicators are way ahead of India and Pakistan and it can actually afford to spend a higher proportion of its budget on defense, which it does not. Clearly, both the efficacy and intensity of Indian DE needs review. It is not in anyone’s interest that the country has a weak or ill-equipped army, navy and air force but there is need for oversight, economy and prioritization. This was stated unequivocally by the Kargil Review Committee (KRC) in its report (Para 9.24 quoted above). Unfortunately, the Group of Ministers seems to have overlooked this aspect. The KRC was competent to make specific recommendations regarding restructuring and wasteful expenditure but chose not to do so. That the KRC stated that drastic measures were required for the efficient utilization of the defense rupee, amounts to a severe indictment of the state of civil-military affairs. It would be interesting to obtain the views of the members of the KRC on the current levels of defense spending.

The Purchasing Power Parity (PPP) Argument

Comparison of military expenditure at market exchange or current rates does not give a correct picture since the cost of manpower, equipment and training varies vastly between countries. This is especially applicable to developing countries like India where goods and services are much cheaper than the developed world. For instance, the cost of equipping, training, paying and maintaining a soldier is about a third in India compared with the US. Similarly, money spent for importing military equipment would buy a much larger basket of civil goods locally. The table below indicates DE of the top ten military spenders for 2008 at both market or current rates and PPP rates and as a percentage of national GDPs for 2007. Also included is the overall percentage share of these countries in world military expenditure and percentage expenditure within the top ten in PPP terms. Conversion to PPP rates has been done using International Comparison Program data (benchmark year 2005), available at the World Bank website,

CURRENT(2008) % GDP(2007) % SHARE(World) PPP % SHARE (Top 10)
1. USA 607.0 4.0 41.5 1.USA 607.0 46.0
2.China 84.9 2.0 5.8 2.China 201.8 15.3
3 France 65.7 2.3 4.5 3. Russia 130.1 9.9
4. UK 65.3 2.4 4.5 4. India 90.2 6.8
5. Russia 58.6 3.5 4.0 5. Saudi Arabia 59.4 4.5
6. Germany 46.6 1.3 3.2 6. France 57.2 4.3
7. Japan 46.3 0.9 3.2 7. UK 55.3 4.2
8. Italy 40.6 1.8 2.8 8. Germany 41.9 3.2
9. Saudi Arabia 38.2 9.3 2.6 9. Japan 39.3 3.0
10. India 30.0 2.5 2.1 10. Italy 37.3 2.8

TOP TEN TOTAL 1083.2 74.0 1319.5 100.0
WORLD TOTAL 1464.0 2.4 100.0

Source, SIPRI Military Expenditure Database 2009 for market rates, percentage of GDP and share of world expenditure. Data pertains to expenditure for 2008 and includes military pensions and allied costs as estimated by SIPRI. SIPRI is of the view that using PPP data for military expenditure has limited relevance. DE for India for 2009 including Defence Services Estimates (Civil) and defined military costs is about 38 billion dollars at current exchange rates.

The top-ten countries incur 74% of total military expenditure. Within the top ten-countries, there is a vast variation of expenditure in absolute terms as well as GDP terms ranging from 0.9% to 9.3% of national GDP. Typically, smaller middle-east countries incur much higher expenditure in GDP terms. World military expenditure has been hovering at about 2.5% of GDP; however the US contribution is very high (41.5%) and boosts the average GDP figure. Thus, military expenditure for the rest of the world amounts to 1.85% of GDP. Indian DE for 2007 at 2.5% of GDP is much higher than this figure. Current spending is at 3.15%. At current market rates, India is at number ten in the list whereas at PPP rates, India is at number four which is in keeping with the fact that it has the third largest army, the fourth largest air force and a blue water navy. India’s DE for 2008 is 90 billion dollars at PPP rates and is touching 115 billion dollars in the current year. Whether this level of expenditure is justified is a matter for civil society including the strategic community to consider. Indian DE amounts to 2.1% of world military expenditure. Within the top ten countries, this amounts to 6.8%at PPP rates and 12.65% if US spending is ignored. Analysts point out that India’s per-capita military expenditure is very low, in fact the lowest in the list above. This is true for current as well as PPPP rates but is considered a specious argument when Indian DE is compared with other items of public spending.

Priorities in Public Spending

The Human Development Report 2008 ( indicates the level of public spending in the areas of health, education and defence. The expenditure includes federal as well as regional or state expenditure. The table below indicates expenditure of selected countries as a percentage of GDP under the three major heads. All figures have been extracted from Table 19 of the UNDP report. To compare the data, intra-country ratios of the three major heads have been calculated. The BRIC group of countries has been included besides figures for USA and UK. Argentina has been included as a special case being a country which graduated from medium to high human development. The countries are listed in descending order of rank in the Human Development Index (HDI).


Country HDI Rank Health(H) Education(E) Defence(D) Total H/E H/D E/D

USA 12 6.9 5.9 4.1 16.9 1.16 1.68 1.43

UK 16 7.0 5.4 2.7 15.1 1.29 2.59 2.00

ARGENTINA 38 4.3 3.8 1.0 9.1 1.13 4.30 3.80

RUSSIA 67 3.7 3.6 4.1 11.4 1.02 0.90 0.87

BRAZIL 70 4.8 4.4 1.6 10.8 1.09 3.00 2.75

CHINA 81 1.8 1.9 2.0 5.7 0.94 0.90 0.95

INDIA 128 0.9 3.8 2.8 7.5 0.23 0.32 1.35

Data for health pertains to 2004. Data for education and defence expenditure pertains to 2005. The expenditure on health in India is still at about 1% of GDP, federal expenditure being 0.4%. Aggregate expenditure on defence in the current year has crossed 3% of GDP.

There is considerable variation in public spending on health, education and defence between the developed countries (USA and UK) and BRIC countries. This is primarily due to the higher cost of goods and services as discussed in the paragraph on PPP rates above. However ratios between heads can be directly compared. The health to education (H/E) ratio is near or above unity for all countries excluding India which indicates that equal and more often higher weightage has been given to health over education. In the case of India, the ratio is abysmally low. China which is the next lowest is 400% higher. It is apparent that health expenditure as compared to education expenditure needs a substantial hike. The health to defence (H/D) ratio varies considerably between countries. The higher developed countries have a much higher ratio indicating that allocation for health is several times more than the allocation for defense. In the case of India, the ratio is not only the lowest but also about a third of the ratio of the next lowest that is China which is also the next lowest in the list in human development. Health expenditure needs to be hiked by three hundred percent to about 3% of GDP to reach the levels of China. It appears that expenditure on health has been suppressed due to much higher allocations made to both education and defense. The education to defense (E/D) ratios also vary considerably. India is at number five of the seven countries in the list. This perhaps indicates that there is a need to reduce DE since the spending on education seems adequate. There is a pronounced imbalance in public expenditure between the three heads which needs to be corrected. The total per-capita expenditure on health (central as well as state expenditure) is about a third of the per-capita expenditure on defence. This low level of funding is the prime reason for poor health parameters which in turn keeps a large proportion of the population in perpetual debt and poverty. The UN millennium development goals pertaining to mortality rates and poverty are not likely to be achieved mainly on account of poor spending and delivery in the health sector. The Finance Minister in his budget speech has stated that the proportion of poverty would be halved by 2014. This will involve lifting about 100 million people above the poverty line in five years if we use Planning Commission norms. This seems highly unlikely at current levels of health expenditure. The fresh allocation for federal spending on health in the current year is Rs 22,641 crores or merely 0.4% of GDP.

The India-Pakistan Equation

The armed forces of both the countries are organized, trained and equipped in a similar fashion; hence defense related expenditure which is a function of combat power can be compared by a comparison of force levels. Force levels evolve over a period of time depending on threat perceptions. India has vaster land and sea frontiers to guard and therefore needs greater combat power in terms of manpower, tanks, guns, ships and aircraft. The table below indicates manpower levels and major items of armament of the two countries (Source, Indian Defense Yearbook, 2009, Natraj Publishers, Dehra Dun).



Active Manpower 1.288 million 0.619 million ~ 2:1

Tanks 4059 2461 1.65:1

Guns 4500 1629 2.75:1

Combat Aircraft 565 360 ~ 1.6:1

Ships/Submarines 26/16 6/8 3:1

It will be seen that though the ratios vary between 1.6:1 and 3:1; it would be prudent to take an overall figure of 3:1 since larger armed forces have larger establishments, inventories and tails. This will also be erring on the safe side. Weightage between different items is being ignored though the overall allocation to both armies is much higher than the other two services. This is an indicative ratio which also covers several other items like aircraft carriers, infantry fighting vehicles, naval aviation, transport and training aircraft, helicopters, self propelled artillery and nuclear capabilities not included above. An alternative methodology would be to compare the number of combat units like infantry battalions, armoured and artillery regiments and combat squadrons. This would however yield a comparatively lower ratio since inventories and establishments have a financial impact.

The table below shows the heads of military expenditure of the two countries. DE in Pakistan is much less transparent and excludes several items including capital costs, pensions and nuclear related costs. In addition, foreign military aid which adds to defence capability is excluded. An assessment has been made of these items. Current exchange rates have been used to convert respective currencies into US dollars. Information of Pakistan federal spending has been taken from the website



Federal Budget Rs 10,20,837 crores ($ 212.67 billion) Rs 2,48,230 crores ($ 31 billion)

Defence Budget 09-10 Rs 1,41,703 crores ($ 29.52 billion) Rs 34,300 crores ($ 4.28 billion)

Capital Expenditure Rs 54,824 crores included above $ 2.14 billion (50% of above)

Military R and D Included in DE (3.3% of DE) $ 0.24 billion (3.5% of DE)

Pensions Rs 21,790 crores ($ 4.53 billion) $ 1.02 billion (15% of DE)

Foreign Military Aid Nil $ 0.7 billion

TOTAL $ 34.05 billion (16% of Federal Budget) $ 8.38 billion (24.7% of Budget)

% GDP 2.7% 4.5%

The ratio of DE between India and Pakistan works out to about 4:1 when their combat ratio is at 3:1. Though Pakistan is spending a much higher proportion of its GDP on defense, it is getting more bang for the buck. Please note that costs of the MoD, para militaries and nuclear systems have been excluded for both countries. If India were to spend at the rate of Pakistan, it would result in a saving of 8.9 billion dollars or Rs 42,700 crores. This is a significant sum of money amounting to 0.74% of GDP and is nearly double the allocation for federal spending on health. A saving of even half this amount would be significant. The reason for a higher rate of expenditure per combat soldier, tank or ship needs to be assessed. Larger inventories, too many headquarters and establishments, ceremonial units, bands and air display flights of fixed and rotary wing aircraft are only a few areas which need to be looked at. In addition, manpower utilization and rationalization needs examination. Pensions have been rising exponentially. If the retirement age of soldiers subject to their being medically fit is raised to 45 years, a significant amount of money could be saved. Pensions should be payable only after completing 20 years of colour service. In the US army, the age of retirement from active service for enlisted soldiers which was 55 years has now been raised to 62 years. However this has also been done to enable late entrants to complete 20 years of pensionable service. It is interesting to note that the official allocation for the Pakistan defense budget falls short of the expenditure on military pensions paid by India even though the overall percentage spending on defense is much higher. The entire outlay of the Pakistan budget is well below India’s outlay on defense spending. Using the $ 1.25 a day norm, poverty rates in Pakistan are significantly lower at 22.6% compared to 41.6% for India ( Clearly, military spending and muscle has not improved the lot of the common Indian citizen.

Internal / External Security

During the tenure of the NDA government, a separate head of accounts was created for police-modernization. It had become clear that state police forces were neither equipped nor trained to tackle terrorism. Law and order being a state subject, it was rightly appreciated that resources available with states were inadequate to meet the requirement of procuring automatic weapons, as also bomb-disposal and protective equipment. This was reinforced in a big way when terrorists struck Mumbai. Lathi wielding policemen had to grapple with terrorists armed with automatic weapons. It has become obvious that allocations made over the years were inadequate to meet even minimal requirements. The amount allocated during FY 2008-09 was a mere Rs 1,340 crores. Even this amount was not fully utilized. Post Mumbai, this was increased to Rs 1,385 crores in the interim budget and to Rs 1,815 crores in the budget announced on 6 July. DE was hiked by thirty five thousand crores. Police modernization continues to be neglected.

Coastal security has been ignored at the country’s peril. In 1993, the sea route was used to land explosives for the Bombay blasts. In 1994, under the United Nations Convention on the Law of the Sea, EEZs of littoral countries were extended from 100 to 200 nautical miles. India ratified UNCLOS III in 1995. The Coast Guard which is responsible for the EEZ was thus required to cover a much vaster area with the same resources. Over the years, ships and aircraft have been acquired but with some eighty vessels and fifty aircraft, guarding an EEZ of over two million square kilometers is a near impossible task. The Navy being the senior service should have been given this responsibility with the resources of the Coast Guard under its command. A blue water navy is of little use when the seaboards remain unprotected. The resources of the states and the local marine police need upgrading. The concept of making the marine police entirely responsible for waters which extend to five nautical miles (9.25 km) needs a re-look. There is a need for integration between internal and external security and defense on both the land and sea frontiers.

Force levels of CPMFs have been rising steadily and it is expected that a million men will be under arms by the end of the next financial year (2010-11). The threat posed by the Naxalite insurgency has been gaining momentum. Merely deploying additional forces will not resolve the issue and will result in militarization of the state. Development of infrastructure, creation of employment and improving health parameters should be undertaken on priority. CPMFs deployed in these areas must also have access to resources which can be used to win over hearts and minds by constructing schools and health centers. Op-Sadbhavana conducted by the army in Ladakh and Jammu and Kashmir is an excellent example of security forces getting involved in development.

Defense Production and the Arms Bazaar

India with the third largest Army in the world, the fourth largest Air Force and a blue water navy is today a doubtful regional power due to its weak economy and dependence on imports of armaments. - - - The danger is that with the thaw in our relations with the USA and our craze for new gadgetry, we could easily fall into the laps of salesmen. Hard thinking is necessary before we keep changing our technology base.

Coonoor 1994 Sam Manekshaw
Field Marshal
(In a foreword to ‘Indian Arms Bazaar’ by Maj Gen Partap Narain, Shipra Publications, New Delhi, 1994)

Defense production and procurement is a major area of concern. There are thirty nine Ordnance Factories and eight public sector undertakings (PSUs) employing over 300,000 workers producing ships, tanks, guns, helicopters and fixed wing aircraft besides ammunition, boots and tents. Yet, we import the bulk of our cutting edge weaponry. Production capacities are not being utilized. The cost of items is borne by the services from within the defense budget. Some items produced by Ordnance Factories are more expensive than the cost of import. The Arjun tank powered by a German engine, developed by DRDO and now being manufactured at Avadi is one such item. The Light Combat Aircraft or LCA, when inducted will be another. Defense PSUs like BEL and BEML make higher profits since their products are used by sectors other than defence; however defence PSUs even while showing nominal profits need heavy capital investment which comes from the PSU pool. Thus the real cost of defense production does not get reflected in DE. Some of the Ordnance Factories can be closed down and the equipment can be manufactured by the private sector. This is difficult to implement since defense workers form a fair-sized vote bank and have strong unions. The state therefore continues to subsidize the inefficient use of resources at the cost of developmental spending.

The Defence R and D establishment (DRDO) needs major overhaul. The P Rama Rao Committee has made several recommendations. Large establishments not producing worthwhile results need to be pruned. There have been a few success stories like the Agni series of missiles. The DRDO works in isolation and the services tend to disregard its capabilities. Some laboratories could be merged to make the organisation more cost effective. This is a subject for evaluation after the implementation of the Rama Rao Committee Report. The DRDO takes up Rs 4,757 crores which is 3.3% of the defense budget. In addition, an amount of Rs 3,723 crores has been charged to capital expenditure which is a combined head for the three services for equipment development and delivery. Like the DRDO, the quality-control and inspectorate organization is bulky and seems to have too many overheads.

The forces prefer import to indigenous production for a variety of reasons including the inability of the DRDO to meet qualitative requirements (QRs) and the inordinate delay in the production of the equipment. The forces themselves must take a part of the blame for projecting unreal requirements. This does not happen when the import route is used since QRs are formulated to conform to the range of equipment available. Weapon systems have a life cycle of about 20 years which gets written down if it takes ten years to produce the equipment. Politicians and bureaucrats, both civil and military, prefer the import route especially from western countries for extraneous reasons. The Defense Procurement Procedure (DPP) has been streamlined, yet an important aspect like offsets has yet to yield the required dividends. The problem of middlemen has been resolved by foreign suppliers opening offices in New Delhi. There has been a proliferation of defense glossies supported directly or indirectly by arms manufacturers. India has become a hub of the world’s arms bazaar. Little wonder that foreign manufacturers want a hike in the 26% FDI limit imposed on joint ventures in the defense sector.


Besides external defense, internal security and human-development form a vital part of the overall security and well-being of the nation. Is the rupee being spent wisely? The answer is in the negative both in terms of quantum and efficacy. DE has risen to unsustainable levels in the last decade primarily on account of dependence on imports and nuclearization. There is a trade-off between defense and developmental spending specifically in the area of health which becomes visible in poor human-development parameters like infant mortality rates and child malnutrition. Bangladesh is well ahead of India in these parameters. Internal security has been neglected for too long. There is a need to balance overall expenditure to meet the challenge of the emerging economic and strategic scenario. Force levels need to be reviewed. Like obsolete equipment, obsolete organizations should be dispensed with. The army has become equipment and staff oriented. It also remains manpower-intensive with too few junior officers and a large tail. The Thirteenth Finance Commission could look into aspects of internal and external security to come to a reasonable limit for both. It would also be expedient if the Commission specifies what constitutes defense spending and whether Defense Services Civil Estimates should form part of defense expenditure. DE must be capped at current levels.

The effects of the global recession are still to play out. Oversight, therefore, needs to be exercised in all areas of government spending. There is no scope for empire building. The plan to send two men into space at a cost of Rs 12,500 crores is an example of incorrect priorities. The defense forces form an important part of the nation’s fabric, yet they must not be a drain on its limited resources. For the armed forces, the country comes first, always and every time and they will rise to the occasion as always. The political leadership must therefore take the service chiefs into confidence with regard to the fiscal situation. With global warming on the horizon; floods, droughts and severe cyclonic storms will occur with increasing frequency. Water is going to be in short supply. These are only some of the challenges which the country and its armed forces will face in the not too distant future. Wars as we have known them will more often be avoided. Hence the need for a lean armed force, a well equipped and trained police force and state policy which will deter a potential aggressor from posing a conventional, nuclear or asymmetrical threat. Only then can the war against poverty and hunger be won.

Colonel Pavan Nair, the author of this guest post, is an engineer by training, and a retired Indian Army officer who has served with distinction in Bangladesh, Kashmir and Sri Lanka. His email address is

Related Links:

Pakistan Must Fix Primary Education Crisis

Pakistani Children's Plight
India's Arms Buildup
Growing US-India Military Ties Worry Pakistan

India: Home to World's Largest Illiterate Population

India-Pakistan Military Balance

South Asia Human Development Slipping

India and Pakistan Contrasted in 2010

Introduction to Defense Economics


Anonymous said...

When india is faced with a neighbour like pakistan what else to do.

'Pak cant give guarantee against repeat of 26/11 " - pak pm

if pakistan make an oral assurance that it will not allow terrorist crossing border and cooperate, it will automatically scaled down the arms race in this part of the world for good.

Knowing pakistan, it is not going to happen as it does not even want to give a lip service then where is the question of practice.

Riaz Haq said...

anon: "'Pak cant give guarantee against repeat of 26/11 " - pak pm"

No one can. And, as the US, Pakistan and Israel have already learned, the kind of weapons you are buying won't help you in your fight to stop terrorists.

As it constantly harps on the ISI and Jihadis, Indian government needs to worry as much or more about the homegrown Hindutva terrorists, and their affiliates in Indian intelligence agencies and the Indian Army, who are trying to spark a devastating war in South Asia between India and Pakistan.

Hindutva terror groups, and their affiliates, have carried out a number of bomb blasts across India in the last few years, and tried to pin the blame on Indian Muslims or the Pakistan's intelligence service ISI. In his book "Who Killed Karkare?", former Maharashtra police chief Mushrif describes nearly a dozen blasts conducted by Hindutva terror groups of different stripes. He argues that a section of India’s intelligence services, a small group in the armed forces and parts of different state police forces have been compromised and infiltrated by these elements, a development that bodes ill for the future of the country, and the region. Some of the blasts, such as the bombing of Samjhota Express, had been falsely blamed on Pakistan's ISI to try and heighten tensions in South Asia. The circumstances around the assassination of Mumbai anti-terror squad (ATS) chief Hemant Karakare, who was pursuing some the major Hindutva figures involved in the bombing campaigns in India, have not been investigated. Demands by Karakare's wife for independent investigation and transparency have been ignored.

anon: "it will automatically scaled down the arms race in this part of the world for good."

If you do scale down, it won't be a favor to any one. Your own people will greatly benefit from it, with less poverty and hunger, and better literacy rates.

anoop said...


"If you do scale down, it won't be a favor to any one. Your own people will greatly benefit from it, with less poverty and hunger, and better literacy rates."

---> But, Riaz, you wont have any material for your blog if that happens.

Riaz Haq said...

Here's a report about hunger at hospitals in India:

At the busy, charitable hospital run by the Rural Medicare Society (RMS) at Mehrauli, on the outskirts of the national capital, where Dhaka is employed, there are provisions for poorer patients. But this is not the case with most state-run or private medical facilities, where patients are left to their own devices when it comes to procuring prescribed medicines or getting their meals.

Unlike in most other countries, in-patients in India must bring along attendants, usually family members, to buy medicines, fetch meals, do the paperwork and help the nurses. These attendants can be seen sitting beside hospital beds or crowding around the corridors.------------

According to Dr. Aarti Vasisht, one of 28 doctors and surgeons working at the RMS hospital, providing patients with timely, balanced and nutritious meals is important because it has a direct bearing on recovery.

The chest specialist added that many of her patients are being treated for tuberculosis and are on heavy medications. "These are people who need to be on special diets and must be provided timely, nutritious meals," she said.

Vasisht has been able to arrange free meals for her patients at the RMS hospital from the charitable Santhigiri Ashram, which has a mission of providing free or subsidised food and medical care for the needy.

"We hope to expand these services and reach other hospitals in the national capital, but this is not easy in a time of recession when the prices of food items have gone through the roof," said Swami Pranavsuddhan, director of the Santhigiri Ashram. "The good thing though is that this is a cause that people seem interested in supporting, and New Delhi is a city of wealthy people who believe that feeding the poor and needy can add positively to their karma."


"In India’s healthcare delivery system it is hard enough to get affordable medicines to most patients, and so the question of ensuring that they eat well is glossed over although everybody is aware of the problem,’’ she said.

The latest review of the National Rural Health Mission (NRHM), released last week, speaks of continuing difficulties in providing free drugs to patients and "the imperative of prescribing medicines from outside," when the government is committed to raising public spending on health from 0.9 percent of gross domestic product to two to three percent of GDP.

Many public hospitals, says NRHM – which has the stated goal of improving the availability of and access to quality healthcare for people, especially those residing in rural areas, the poor, women and children – now run commercial pharmacy shops within their premises.

What that means is that patients who do not have the cash to buy medicines with may have to do without them. The same goes for the hospital canteens from where patients are expected to buy food for themselves and their attendants.

In sharp contrast to the services at the RMS centre are the swish hospitals dotting the capital that cater to the health needs of the well-to-do and to a burgeoning medical tourism industry that attracts 450,000 foreign patients each year.

Hospitals such as the ‘Indraprastha Apollo,’ which ranks among the world’s biggest private health facilities, do not allow attendants and provide patients with meals prepared under the careful supervision of dieticians.

According to the study one million Indians die every year as a result of inadequate healthcare and that 700 million of India’s 1.1 billion people have no access to specialist care simply because 80 percent of specialists live in urban areas.

The NRHM also acknowledges that over 40 percent of hospitalised Indians borrow heavily or sell assets to cover medical expenses and that over 25 percent of hospitalised Indians fall below the poverty line because of hospital expenses.

Riaz Haq said...

In a presentation to Pakistani media, Gen Kayani reiterated his widely reported comments on the Pakistan Army’s view of the situation in Afghanistan and the way forward there.

History, unresolved issues, India’s military capability and its ‘Cold Start’ doctrine meant that Pakistan could not afford to let its guard down. Repeating a well-known formulation, Gen Kayani said: “We plan on adversaries’ capabilities, not intentions.”

The tough, matter-of-fact line on India was in stark contrast to that of Gen Kayani’s predecessor, Gen (retd) Musharraf, who tried hard to push for peace with India in his latter years in power.
The general was particularly keen to highlight the threat posed by India’s ‘Cold Start’ doctrine. Turing the traditional theory of war on its head, ‘Cold Start’ would permit the Indian Army to attack before mobilising, increasing the possibility of a “sudden spiral escalation”, according to Gen Kayani.

The Pakistan Army’s concerns about ‘Cold Start’ are well known, but Gen Kayani went as far as to put a timeline on its implementation: two years for India to achieve partial implementation and five years for full.

If true, the strategic impact could be of the highest order: defence analysts have speculated that ‘Cold Start’ may lead the Pakistan Army to lower its nuclear threshold as a way of deterring any punitive strikes or rapid capture of territory by the Indian armed forces.

Yet, Gen Kayani was also keen to point out that he did not have a one-dimensional view of security. Despite the fact that India’s defence budget is “seven times” that of Pakistan’s “there has to be a balance between development and military spending,” the general said.

He also pleaded that “peace and stability in South Asia should not be made hostage to a single terrorist act of a non-state actor”, a reference to the November 2008 Mumbai attacks.

Refusing to talk to Pakistan would send a bad signal on two counts: one, the non-state actors would know that they have the power to nudge India and Pakistan towards war; and two, within India it would become clear that relations with Pakistan could be suspended indefinitely.

The comments on India, though, came only later in an extended Power Point Presentation that covered everything from the operations in Swat and South Waziristan to the “way forward” in Afghanistan. Gen Kayani seemed relatively pleased with the reaction his presentation received when first unveiled at a meeting of chiefs of defence staff of Nato and its allied countries in Brussels late last month.

Emphasising what he termed the “fundamentals”, he claimed that until the Afghan government improved its credibility and governance record and until the Afghan population began to change its perception that Isaf is not winning, the Afghan government would not be able to establish its writ and the local Taliban would not be “weaned off”.

But on Afghanistan, too, India featured in Gen Kayani’s comments. Rejecting India’s reported interest in training the Afghan National Army and the country’s police force, Gen Kayani argued that Pakistan had a more legitimate expectation to do so.

Taken together, Gen Kayani’s comments suggest that the possibility of a thaw in relations between India and Pakistan any time soon is low.

Both India and Pakistan appear to have firmly lapsed into the old pattern of highlighting the differences between them and the threats they face from each other, while nominally leaving the door open to an improvement in relations if one side addresses the other’s concerns.

Unlike the past, though, the stakes appear to be higher because of the uncertain future of Afghanistan and a ‘nuclear overhang’ that may be affected by ‘Cold Start’.

Riaz Haq said...

Here are excerpts from WSJ story on US arms deals with India and Pakistan:

The U.S. has made billions of dollars in weapons deals with India, which is in the midst of a five-year, $50 billion push to modernize its military.

At the same time, American military aid to Pakistan stands to nearly double next year, allowing Islamabad to acquire more U.S.-made helicopters, night-vision goggles and other military equipment. The aid has made it easier for Pakistan to ramp up its fight against militants on the Afghan border, as the U.S. tries to convince Islamabad that its biggest security threat is within the country, not in India.

During a late January trip to Islamabad, Defense Secretary Robert Gates said the U.S. would for the first time give Pakistan a dozen surveillance drones, a longstanding Pakistani request.
Washington's relationships with the two nations are very different. India, which is wealthier and larger than its neighbor, pays for weapons purchases with its own funds. Pakistan, by contrast, uses American grants to fund most of its arms purchases. A new U.S. counterinsurgency assistance fund for Pakistan is slated to increase from $700 million in fiscal year 2010 to $1.2 billion in fiscal year 2011.

"We do straight commercial deals with India, while Pakistan effectively uses the money we give them to buy our equipment," said a U.S. official who works with the two countries. "But we think that's ultimately in our national interest because it makes the Pakistanis more capable of dealing with their homegrown terrorists."

India is one of the largest buyers of foreign-made munitions, with a long shopping list which includes warships, fighter jets, tanks and other weapons. Its defense budget is $30 billion for the fiscal year ending March 31, a 70% increase from five years ago. The country is preparing its military to deal with multiple potential threats, including conflict with Pakistan. Tensions have recently flared between India and China over territorial claims along their border. China defeated India in a short war in 1962.

"For 2010 and 2011, India could well be the most important market in the world for defense contractors looking to make foreign military sales," said Tom Captain, the vice chairman of Deloitte LLP's aerospace and defense practice.

Russia has been India's main source of military hardware for decades, supplying about 70% of equipment now in use. Moscow is working to keep that position, with talks ongoing to sell India 29 MiG-29K carrier-borne jet fighters, according to an Indian Defense Ministry spokesman.

The Obama administration is trying to persuade New Delhi to buy American jet fighters instead, a shift White House officials say would lead to closer military and political relations between India and the U.S. It would also be a bonanza for U.S. defense contractors, and has dispatched senior officials such as Mr. Gates to New Delhi to deliver the message that Washington hopes India will choose American defense firms for major purchases in the years ahead.

Shortly after a late January visit by Mr. Gates—on the same tour that took him to Islamabad—In late January, the administration signed off on India's request to purchase 145 U.S.-made howitzers, a $647 million deal.Pentagon spokesman Geoff Morrell said Mr. Gates's visit didn't affect the substance or timing of the howitzer purchase.

That came days after India formally expressed its intent to purchase 10 cargo transport aircraft from Boeing Co. in a deal analysts say could be worth more than $2 billion. Last year, India spent $2.1 billion on eight Boeing long-range Poseidon reconnaissance aircraft for the Indian navy.

Unknown said...

~Mr. Raiz,
You would have made all Pakistanis proud if you could have devoted your time and effort highlighting the plight of your citizens, economy or terrorism, instead of feeling jealous about the advancement and recognition India has garnered world over! Today advanced nations like UK, Germany and France are vying for Indian share of investment in their own country. India is today the 2nd largest investor in UK after USA. India is touted by all international investors to overtake Chinese economy by 2050.
Today, India is ranked among the Top-5 largest economies in the world. We are a trillion dollar economy. Today, we have less than 25% of our population below poverty line also please note that we are targeting ourselves to be among the most Developed & advanced nations of the world by 2020! Even if this process might get extended by another 2 or 5 more years, we are determined to achieve that status, but what about poor Pakistan?
Intelligent and learned people like you may better spend time, effort and mobilise necessary resources for the upliftment of Pakistanis by providing Western Education (need of the hour to catch up with India!), rather than wasting your time showcasing India in bad light (Dharavi/so called Hindutva terror group). Mr. Obama wants to revamp US education system to catch-up with India. Who do you think teaches English to English, for your kind information they are mostly Indian professors and teachers!
Before I conclude, would like to seek your wisdom on Kashmir - Let's us assume that Kashmir becomes an integral part of Pakistan, will the hatred against Indians (we say India, not HINDUstan) that is continuously fed among the Pakistanis for keeping them united, would the attitude ever change? What would be the next strategy? I can see another wry smile on your face!
Unfortunately, Pakistan doesn’t have a long-term strategy for any good cause -Taliban & terrorism against its own neighbours has severely backfired! Overdose of anything is lethal, let it be religion. I personally know many Pakistani qualified friends, who are lining up for Canadian immigration. What good are you doing to yourself or how is this serving Pakistan – looking at remittances? Feel pity about all Pakistanis like you!!

Riaz Haq said...

India's 2010-2011 budget is up another 8.13 percent on top of the 34% increase in 2009-2010, according to

India's defence expenditure has been raised to Rs.147,344 crore (Rs.1.47 trillion/$32 billion) for 2010-11, up 8.13 percent from the revised estimates of the previous fiscal, in the budget presented by Finance Minister Pranab Mukherjee in the Lok Sabha Friday.

"Secure borders and security of life and property fosters development. I propose to increase the allocation for defence to Rs.147,344 crore. This would include Rs.60,000 crore for capital expenditure," Mukherjee said in his budget speech.

"Needless to say, any additional requirement for the security of the nation will be provided for," he added.

Defence Minister A.K. Antony declined to comment on the allocations.

Though the expenditure has been hiked by Rs.11,080 crore, in real terms, however, the hike works out to only 3.98 percent as Rs.141,703 crore had been originally allocated for 2009-10 but this was later revised to Rs.136,264 crore.

The allocation for 2010-11 works out to 11 percent of India's Rs.11,08,749 crore budget for the fiscal, down one percent from the previous year

The capital expenditure of Rs.60,000 crore is higher by Rs.5,176 crore than the Rs.54,824 crore originally allocated for the previous fiscal but Rs.7,000 crore of this was returned as unspent. A similar amount was returned in 2008-09.

As in the past, the 1.2 million-strong Indian Army has been granted the lion's share, but at Rs.57,326 crore this is lower by Rs.1,322 from the Rs.58,648 crore originally allocated for 2009-10, Rs.740 crore of which was returned.

The Indian Navy has been allocated Rs.9,329 crore, Rs.1,007 crore more than the Rs.8,322 that was allocated for the previous fiscal which was later raised to Rs.9,312 crore. In real terms, the raise amounts to just Rs.17 crore.

In the case of the Indian Air Force, its allocation of Rs.15,210 crore is Rs.992 crore higher than the Rs.14,318 allocated for the previous fiscal that was later raised to Rs.14,681.

The ordnance factories are perhaps the biggest losers. Originally allocated Rs.832 crore for the previous fiscal, this was raised to Rs.2,187 crore and has now been pegged at Rs.246 crore for 2010-11, a reduction of Rs.1,941 crore or 88 percent.

The Defence Research and Development Organisation (DRDO) has got a hike of Rs.881 crore to Rs.5,230 crore from its revised allocation of Rs.4,349 crore in the previous fiscal.

Riaz Haq said...

China's is reporting 7.5% increase in Chinese defense budget:

China plans to increase its defense budget by 7.5 percent in 2010, only about half of last year's planned growth of 14.9 percent, a parliament spokesman said here on Thursday.

The planned defense budget is 532.115 billion yuan (about 78 billion U.S. dollars), a rise of about 37 billion yuan from last year's defense expenditure, Li Zhaoxing, spokesman for the annual session of the National People's Congress (NPC), told a press conference.

Defense spending would account for 6.4 percent of the country's total fiscal expenditure in 2010, the same with last year, he said.

However, Li stressed that the figures would not be final until the budget plan is approved at the NPC annual session due to open in Beijing on Friday.

It is the first time for China's defense budget growth rate to drop to less than 10 percent in recent years which saw a row of consecutive double-digit increases.

This year's increased budget will be mainly be spent to support the reform of China's military and improve its capability to deal with varied threats and complete diversified tasks, Li said.

Part of the money will also be used to raise the living standards of servicemen, he said.

China has always taken the road of peaceful development and keep in line with the defensive national defense policy, Li said.

Taking into account China's large population, its vast territory, and its long coastline, the country's defense budget is "comparatively low," according to the former Foreign Minister.

"China's defense expenditure in recent years accounted for about 1.4 percent of its GDP," he said, adding that the ratio was four percent for the United States, and more than two percent for the United Kingdom, France and Russia.

He said China has been continuously raising its military transparency by submitting defense budgets to the NPC annual sessions for approval, issuing white papers every two years on its national defense, and establishing a spokesperson system and websites for its Defense Ministry.

Riaz Haq said...

Here's an analysis titled "Vision 2010: a dangerous myopia" by Amiya Kumar Bagchi in the Hindu:

The Central budget of 2010-11 is a further step in the realisation of a vision of India vibrant with the income, wealth, saving, education and the entrepreneurial energy of the top 5-10 per cent of the population and the rest of Indians, serving that minority and surviving as barely literate, malnourished multitude.

With the accession of Rajiv Gandhi to power, a vision began to germinate. That vision was that of an India that would be vibrant with the entrepreneurial energy of the few, and the rest of the population serving those few with their labour.

Look at the successes of the budget: the professional middle class is happy with the cuts in taxes collected from it. The business community, including foreign investors, is happy, because of further privatisation of public assets by which the Finance Minister proposes to raise Rs. 25,000 crore, because of the looming privatisation of many operations of the Indian Railways, whose kitty is nowhere near what it should be for even partial implementation of the projects announced by the Railway Minister, because the FDI path would be further smoothed and because licences would be issued for fresh private banks. Never mind if they fail as the Global Trust Bank did, the government will pick up the bill directly or indirectly, in accordance with its earlier record and the recent practice in the United States and Britain where banks failed but bankers remained prosperous. The Indian stock market responded positively, thus sending a message of welcome to the budget and generating profits for the bulls.

The Finance Ministers of the neoliberal Central government had earlier instituted the Fiscal Responsibility and Responsibility Management Act. This became their excuse to drastically cut down public investment and expenditure on the social sector. As soon as the global financial crisis hit India and the interests of the Indian rich demanded fiscal stimulus, the government overthrew fiscal orthodoxy and budget deficits soared. North Block policymakers can claim that the stimulus worked and the growth rates did not crash. The problem is with the content of that growth.


The Union Cabinet recently approved an agreement with the U.S. on ‘Agricultural co-operation and food security.' Under an India-U.S. Agricultural Knowledge Initiative, multinational agribusiness firms such as Cargill and Monsanto can become members of the policymaking body. This is ironical since most of U.S. agribusinesses are conducted under the umbrella of huge government subsidies, while the current budget has cut the measly subsidies poor farmers enjoy in India. Indian agriculture has grown slowly in recent years, and food grain production has lagged behind population growth.

Ordinary Indians are badly malnourished and calorie intake has fallen over time. An Expert Group appointed by the Planning Commission has proposed 1800 calories per day as the norm of consumption by an adult for fixing the poverty line. This norm is applicable only for light or sedentary work. How is a construction worker with heavy head loads or an agricultural worker driving buffaloes in a flooded paddy land going to do his work and lead a healthy life or survive long? Even this norm yields an estimate of poverty of about 42 per cent in 2004-05, much higher than the estimates quoted officially. If the Food Security Bill is passed by Parliament, it will presumably be implemented by accepting the older estimate or the new estimate of the Expert Group. Either way, a vast number of people who are malnourished will remain in that state.

Rahul said...

Mr. Riaz. Thank you for quoting so many facts. I agree with you on many statistics. But these are no cases to argue that we should start building good relations with your country, even if Pakistan continues to support terrorism in India. Also, defence expenditure cannot be decreased. We have two hostile neighbours and its not possible to let the guard down.

Also, I would point out your habit of quoting so many reports. Mr. Riaz we are aspiring to be a developed power. We have not achieved yet. The problems which you are enumerating are getting improved day by day. Various schemes & acts like NREGA,NRHM, NUHM, PMGSY, RKVY are certainly making a impact. If not how could we target to abolish poverty in the next 10 years.

The basic difference between India & pakistan is that Pakistan has currently no programmes or vision. I have grossed your national dailies, and have not come across any major scheme which is currently going on. Infact there is a severe power shortage which is only being highlighted. Nothing else. No vision-2020, no estimates of how to solve poverty, unemployment.Only thing is discussed is either KLB, Taliban, conspiracy thoeries about RAW,CIA,MOSSAD. So you see, this is the difference. You fail to report that Pakistan is currently dependent on IMF for even buying food, while India has recently offered a loan to the same organisation.

Riaz Haq said...

India has unofficially become the world's child death capital, with a study claiming that over 5,000 children die in the country every day of "totally preventable causes". According to the study, Child Health Now, by the NGO World Vision, India accounts for the highest number of child deaths (under five years of age) in the world at 1.95 million per year.

The study revealed that the majority of the deaths occur in the child's first year itself. The causes included diarrhoea, pneumonia and neo- natal problems.> Simple life- saving measures such as oral rehydration solutions, basic vaccinations, breastfeeding and using mosquito nets could bring down the dismal number by more than two thirds, the report said.

Nigeria and the Democratic Republic of Congo follow India in the list. Together, the three nations account for 40 per cent of the total child deaths in the world. It was also found that the three countries allocated the least share of funding - less than three per cent - to maternal and child heath in the health sector allocation.

Reni Jacob, the advocacy director for World Vision India, said, "When hundreds die in a disaster, it is considered an emergency. But when 5,000 children die every day, it is not considered one. This is the biggest human rights and child rights violation of all times." The fact that simple interventions can go a long way in preventing child deaths is evident from the disparities that exist within India itself. While states like Orissa have a high infant mortality rate of 10 per cent, in others like Kerala, the rate is just a little over 1 per cent. And that is primarily because of initiatives in child care and maternal health services.

Indeed, the report found that children in states like Uttar Pradesh and Bihar are more vulnerable than those in Kerala and Tamil Nadu. In Bihar, less than one- third infants are breast- fed and 50 per cent of children are stunted because of malnutrition. The state has a high infant mortality rate of 85 deaths per 1,000 live births.

World Vision has launched a five- year campaign in India to address the alarming situation. It has also urged the government to revamp the National Rural Health Mission and widen the focus of the Integrated Child Development Scheme to less than three- year- olds.

Riaz Haq said...

Here's an excerpt from a recently published article on Indian missile defense:

A ballistic missile flight from Sargodha, Pakistan, could reach New Delhi in about 5-7 minutes. As such, Indian missile defense proponents envision the system working as follows: A technically complex and vast constellation of early warning sensors would detect the missile immediately after it is launched. This part of the system is already more or less in place; the Green Pine radar, which India purchased from Israel around 2002 and is situated about 200 kilometers north of New Delhi, can detect a missile 90 seconds after it has been launched--at least on a preliminary basis. The next step is to determine whether the signal picked up by the radar is that of an incoming missile or a false alarm.

Complicating matters is that India and Pakistan share a border, making for shorter ballistic missile flights. For example, the estimated total missile flight times are 8-13 minutes for ranges of 600-2,000 kilometers. The flight times can be even less if the missile is flown in a depressed trajectory.

Such a short time period places stringent conditions on procedures for evaluating and verifying warnings. There would be no time to consult or deliberate after receiving this warning. In other words, any response would have to be predetermined, presenting a significant likelihood of accidental nuclear war from false alarms.

Oddly, despite such potentially catastrophic consequences, in India the debate about missile defense has become a debate about India's burgeoning ties with Washington as a part of New Delhi's "Next Steps in Security Partnership"--a 2002 diplomatic initiative between the United States and India to expand their cooperation in civilian nuclear activities and civilian space programs, along with broadening their dialogue on missile defense to promote nonproliferation and to ease the transfer of advanced technologies to India.

Riaz Haq said...

Here's another commentary on India's missile defense by a blogger on Nuclear Dreams:

Pakistan is a stone’s throw away from the Indian border, and as Gopalaswamy in this essay and Mian and others in a more detailed 2003 Science and Global Security article explain, flight time for a missile to reach New Delhi from Pakistan would be about 4-7 mins. What would the Indian authorities do in such a short time? Detecting any such signal and confirming it as a true one would consume all the time needed for authorities to determine it as a hostile missile launch from Pakistan. The detection would be done by the Arrow system that India acquired from Israel that’s located about 200 kms from Delhi. But because of this very short flight time, there would be no time for further deliberation and any response would have to be a predetermined one.

As Mian and his colleagues state in their article, there are two forms which predetermined response could take; civil defense and/or retaliation. Retaliation if at all possible in such a short time would have to be very quick. Retaliation against nuclear-tipped missiles would be very difficult in the boost phase (right after the missile lifts off, which gives the defense about 90 seconds to destroy the missile) and extremely dangerous in the terminal phase (the phase before the missile hits the target during which its destruction could nonetheless cause great damage to the home territory). As both articles state, with such predetermined responses the threat of false alarms and nuclear conflict increases, an assertion borne out by several close calls during the Cold War even when the response time was much longer.

Riaz Haq said...

Recently, a former editor of the Statesman in Calcutta, Sunanda K Datta-Ray, humorously wrote in the Indian Telegraph what the answer would be to anyone questioning British aid to India, saying that the likely retort would be along the lines of: “Well, after they’ve paid for their military and space programmes, there’s very little left for food."

Riaz Haq said...

Here's a recent news report on Asian nukes from Times of India:

Pakistan is estimated to have more nuclear warheads than India and the two Asian neighbours along with China are increasing their arsenals and deploying weapons at more sites, two eminent American atomic experts have claimed.

While Pakistan is estimated to possess 70-90 nuclear weapons, India is believed to have 60-80, claims Robert S Norris and Hans M Kristensen in their latest article 'Nuclear Notebook: Worldwide deployments of nuclear weapons, 2009'.

The article published in the latest issue of 'Bulletin of the Atomic Science' claimed that Beijing, Islamabad and New Delhi are quantitatively and qualitatively increasing their arsenals and deploying weapons at more sites, yet the locations are difficult to pinpoint.

For example, no reliable public information exists on where Pakistan or India produces its nuclear weapons, it said.

"Whereas many of the Chinese bases are known, this is not the case in Pakistan and India, where we have found no credible information that identifies permanent nuclear weapons storage locations," they said.

"Pakistan's nuclear weapons are not believed to be fully operational under normal circumstances, India is thought to store its nuclear warheads and bombs in central storage locations rather than on bases with operational forces. But, since all three countries are expanding their arsenals, new bases and storage sites probably are under construction," the two nuclear experts said.

Riaz Haq said...

A BBC report on Pak defense budget hike:

Pakistan has announced it is to increase defence spending by 17% in the coming year, with analysts saying much of it will be used to combat militants.

In his budget speech to parliament, Finance Minister Abdul Hafeez Shaikh said security forces should know they had the support of MPs.

Defence spending will rise to more than $5bn a year from next month.

Pakistani forces have carried out major offensives in the north-west over the past year.

However, there has also been a wave of deadly attacks by Islamic militants throughout the country.

"I think security is our topmost issue," said Mr Shaikh.

"We are facing a situation in which our armed forces, paramilitary forces and security forces are laying down their lives. They are bearing pain for the country and the people, I salute them. They should know from this house that we all stand by them."
Suicide attacks

In the past three years more than 3,400 people have been killed across Pakistan in bomb blasts and suicide attacks blamed on Taliban militants.

Last week more than 90 people were killed in co-ordinated attacks on two mosques of the minority Ahmadi Islamic sect in Lahore.

Pakistan, a vital ally for the US, has been heavily burdened by the cost of fighting Taliban insurgents along its Afghan border.

Mr Shaikh said government policies had reined in inflation - from 25% down to 13% - and brought economic stability.

"We are seeing the beginning of recovery," he said.

In 2008 Pakistan secured a $10bn loan package from the International Monetary Fund to keep its economy on track.

Analysts say the IMF is now putting pressure on Pakistan's financial institutions to make further reforms.

Riaz Haq said...

Here's Ahmad Rahid's take published by BBC on Pakistan budget priorities for 2010-2011:

When the $38bn annual budget was announced in parliament on 5 June, legislators sat up when it was announced that defence spending would be $5.2bn for 2010-11 - a rise of 17% compared to last year or 13.7% of the total budget.

Even more shocking news came a few days later when Saqib Shirani, principal economic adviser to the government, corrected that figure to say that actual defence spending for 2010-11 would be $7.9bn, a 30% rise compared to last year and 21% of the total budget.

The government did not disclose how it accounted for some $1.3bn received over the past year in Coalition Support Funds (CSF) by the US administration for fighting "terrorism".

With 28% of the budget being reserved this year for servicing Pakistan's huge external debt of $54bn, nearly 60% of the budget is taken up by just two items - defence spending and debt servicing.

Almost the entire development budget of $9.2bn will be provided by outside donors.

Meanwhile the country spends just 2% of Gross Domestic Product (GDP) on education, despite the fact that average literacy is only 57%. Even the army admits that the lack of education is fuelling militancy.

However with the economy in a downward spiral and the government facing an internal funding crisis in the months ahead, Islamabad has begun to threaten the US.

Retired Lt Gen Syed Akthar Ali told parliament that the US government had for two years willfully withheld billions of dollars of CSF that were owed to Pakistan.

''The time that we have to rethink our security priorities about external threats is approaching,'' Mr Ali warned recently.

"We will stop operations (in Fata) and go back to the eastern borders,'' he added threateningly.

However he admitted that in the past six months the US had released $1.3bn in CSF arrears, but was still holding back payments of $1bn.

Prime Minister Yousuf Raza Gilani was equally blunt when he told visiting Richard Holbrooke, US special envoy for Pakistan and Afghanistan, that ''time is running out fast, public support can only be kept intact if the international community start delivering on their pledges.''

At a conference in Tokyo a year ago, major donors who make up the "Friends of Pakistan" pledged $5bn in aid, but so far few pledges have been honoured except by the US.

''There is grand disillusionment amongst the Europeans for Pakistan's refusal to address our concerns - transparency about aid funds, improving governance, using aid money to build up defences against India rather than fighting terrorism and its lack of concern for minorities,'' a senior European diplomat said.

Mr Gilani's recent trip to the European Union (EU) in Brussels, following the brutal killing of 90 Ahmedis in Lahore by militants was a public relations disaster, with the EU bluntly refusing to fund Pakistan unless it improved its governance record.

Yet even as Pakistani leaders cajole the West for more money and warn of an impending economic collapse, the army insists that the world must recognise Pakistan as a full blown nuclear power.

anoop said...

This recent report is alarming. 60% of the Budget in non-development expenditure. This is bad news for a India. If things become worse India should help out, I feel.

Riaz Haq said...

Anoop: "This is bad news for a India. If things become worse India should help out, I feel."

India's Debt-GDP ratio is worse than Pakistan's.

Here are excerpts from an interview with US investor Jim Rogers published in Forbes March 2010 issue.

After all the budget euphoria, it is time for a reality check. Investor and venture capitalist Jim Rogers remains deeply skeptical of India's future. In an interview with S. Srinivasan, he argues that the country is sitting on a fiscal time bomb.

Some specific global lessons or examples that India can adopt from other countries such as China?
Open your borders to foreign capital and brains. For example, foreigners cannot enter retailing in India, but Wal-Mart, etc. are all over China. Your politicians close down free commodity markets every time prices rise as if the markets were making the prices rise!

Farmers can own only very, very small farms, so India cannot compete on the world stage, yet India should be one of the great agriculture nations of the world.

What will it take to get you to invest in India?
Some sense of 21st-century reality. Open the economy [in areas] such as retailing, energy, agriculture, etc. Make the currency fully convertible.

What are the lost opportunities in the budget, according to you?
The same things I just mentioned. Likewise why not start reducing the gigantic debt if things really “are getting better,” as he claims?

You have watched India for a long time. Where do you think the country will go from here?
Continue muddling along until the reality of the huge debt-to-GNP [ratio] hits home and stops things.

anoop said...


I expressed genuine concern and you make it a India-Pakistan contest. Anyway, India's economic stability is far greater than Pakistan's considering India's economy grows by a healthy 6% when most of the economies didnt grow at all in a recession year. Pakistan's economy barely outgrew its population growth! Thats how bad Pakistan's position is. On the other hand India's growth is going to touch double digit in the next 5 years.

Also, Pakistan's competitors are Afghanistan, Somalia, Sudan,etc, not India when it comes to stability according to a paper.

Pakistan is in a league of its own compared to India when it comes to instability and all that jazz..

Riaz Haq said...

There is Booming industry of Terrorism Experts and Security Research Institutes in India, according to CyberGandhi, an Indian blogger who wrote a post titled "A Zillion Reasons to Escape From India":

With the emergence of Hindutva fascist forces and their alliance with Neo cons and Zionists, India witnessed a sharp increase in the number of research institutes, media houses and lobbying groups. According to a study by Think Tanks & Civil Societies Program at the University of Pennsylvania, India has 422 think tanks, second only to the US, which has over 2,000 such institutions.

Out of 422 recognized Indian think tanks, around 63 are engaged in security research and foreign policy matters, which are heavily funded by global weapon industry. India’s Retired spies, Police officers, Military personals, Diplomats and Journalists are hired by such national security & foreign policy research institutes which gets enormous fund from global weapon industry. These dreaded institutions are in fact has a hidden agenda. Behind the veil, they work as the public relations arm of weapon industry. They create fake terror stories with the help of media and intelligence wing, manipulate explosions through criminals in areas of tribals, dalits or minorities in order to get public acceptance for weapon contracts.

By creating conflicts in this poor country, Brahmin spin masters get huge commission from the sale of weapons to government forces. To this corrupt bureaucrats, India’s ‘National Interest‘ simply means ‘their self Interest’. Their lobbying power bring more wealth to their families as lucrative jobs, citizenship of rich countries and educational opportunities abroad.

Mentionable that India is one of the world’s largest weapons importers. Between 2000 and 2007 India ranked world’s second largest arms importer accounting for 7.5 % of all major weapons transfers. It stood fourth among the largest military spender in terms of purchasing power in 2007 followed by US, China and Russia.

Over 1,130 companies in 98 countries manufacture arms, ammunitions and components. 90 % of Conventional arms exports in the world are from the permanent five members of the United Nations Security Council namely USA, UK, Russia, China & France. The countries of Africa, Latin America, Asia, and the Middle East hold 51 per cent of the world’s heavy weapons.

The Defence Offset Facilitation Agency estimating the expenditure on the sector at USD 100 billion for next five years. At least 38 court cases relating to arms agreements are still pending against bureaucrats and military officers. Hindu fascist forces currently enjoy upper hand in media, civil service, judiciary, defence and educational streams of Indian society. Sooner or later, 25,000 strong democratic institutions in India will be collapsed and the country will be transformed to a limited democracy under the rule of security regime like Turkey or Israel. Hindutva’s security centric nationalism never was capable of bringing peace and protection to the life of our ordinary citizens.

According to Global Peace Index, India currently ranked on bottom, (122 with 2.422 score). Interestingly, our favourite arms supplier, Israel is among the worst performer when it comes to peace ranking. (141). It reminds a simple fact that the peace cannot be attained by sophisticated security apparatus.

Further more, India topped on Asian Risk Prospects -2009, with the highest political and social risk, scoring 6.87, mainly because of internal and external instability (PERC)

Riaz Haq said...

India ranks 67, far worse than Pakistan's ranking of 52 on the world hunger index 2010 report published recently, according to a Times of India report.

China is ranked well ahead of India and Pakistan at the ninth place, while Pakistan is at the 52nd place on the 2010 Global Hunger Index, released by the International Food Policy Research Institute (IFPRI) in association with a German group Concern Worldwide and Welthungerhilfe.

In India, the high Index scores are driven by high levels of child underweight resulting from the low nutritional and social status of women in the country, the report pointed out, adding that India alone accounts for a large share of the world's undernourished children, the IFPRI report said.

India is home to 42% of the world's underweight children, while Pakistan has just 5%, it added.

Among other neighbouring countries, Sri Lanka was at the 39th position and Nepal ranked 56 by index. Bangladesh listed at the 68th position.

"The economic performance and hunger levels are inversely correlated. In South and Southeast Asia, Bangladesh, India, Pakistan and Timor-Leste are among countries with hunger levels considerably higher than their gross national income (GNI) per capita," the IFPRI report said.

"Undernutrition in the first two years of life threatens a child's life and can jeopardise physical, motor and cognitive development. It is therefore of particular importance that we take concerted action to combat hunger, especially among young children," the report stressed.

It further said that the global food security is under stress. Although the world's leaders, through the first Millennium Development Goal, adopted a goal of halving the proportion of hungry people between 1990 and 2015, "we are nowhere near meeting that target."

"The 2010 world Global Hunger Index (GHI) shows some improvement over the 1990 world GHI, falling from 19.8 points to 15.1 or by almost one-quarter. The index for hunger in the world, however, remains serious," it noted.

In recent years, however, the number of hungry people has actually been increasing. In 2009, on the heels of a global food price crisis and in the midst of worldwide recession, the number of undernourished peopled surpassed one billion, although recent estimates by the UN body Food and Agriculture Organisation suggest that the number will have dropped to 925 million in 2010, it added.

Read more: India ranks below China, Pak in global hunger index - The Times of India

Riaz Haq said...

In a recent interview, Indian Army chief Gen Singh talks about "fighting through our area which has been contaminated by a nuclear strike. We are confident that we will get through in such contaminated areas and this is part of our training methodology, doctrine and our concept".

It begs the questions: Is Mr Singh breeding super jawans immune to radiation?

I think Gen VK Singh's thinking is naive and dangerously out of date, it's as old as the 1950s when the Americans were building shelters in their basements to survive nuclear attack by the Soviet Union. I hope someone puts some sense into Singh's empty little hand about the reality of modern nuclear warfare.

Riaz Haq said...

Here's what Roy told the Guardian after the reports of her planned arrest today:

"I spoke about justice for the people of Kashmir who live under one of the most brutal military occupations in the world; for Kashmiri Pandits who live out the tragedy of having been driven out of their homeland; for Dalit soldiers killed in Kashmir whose graves I visited on garbage heaps in their villages in Cuddalore; for the Indian poor who pay the price of this occupation in material ways and who are now learning to live in the terror of what is becoming a police state."

Anonymous said...

It seems the British press loves asking this question with a fair amount of regularity lately.
Just today the Telegraph reported that Prince Charles’ charity is spending a few million pounds on building eco-friendly homes for 15,000 slum-dwellers in India. Meanwhile the Guardian is wondering whether India will make a bold and symbolic statement by refusing the 250 million pounds in aid it receives from the UK annually.
Here is a country [India] which, as Andrew Mitchell, the UK secretary for international development, puts it, “is roaring out of poverty”. It is the 11th largest economy in the world. It is spending $31.5bn on its defence budget and $1.25bn on a space programme. So why, in these cash-strapped times, is the British government giving aid to India?

If only India’s 400+ million people living in dire poverty could learn to subsist on a diet of ammunition and rocket fuel.

Riaz Haq said...

Here's an excerpt from a WSJ piece by Amol Sharma justifying India's arms buildup:

At Mazagon Dock near the southern tip of Mumbai, hidden behind high concrete walls, hundreds of Indian workers are putting the finishing touches on the hulls of two 217-foot Scorpène-class attack submarines, the first of six slated to be built over the next few years.

Nearby, workers are adding to India's fleet of stealth frigates and guided-missile destroyers.At Mazagon Dock near the southern tip of Mumbai, hidden behind high concrete walls, hundreds of Indian workers are putting the finishing touches on the hulls of two 217-foot Scorpène-class attack submarines, the first of six slated to be built over the next few years.

Nearby, workers are adding to India's fleet of stealth frigates and guided-missile destroyers.

One big reason India is beefing up its arsenal: China.

"It goes without saying that India must be seriously concerned with the rise of China's strategic power, including its military and economic power," says Ashwani Kumar, member of parliament from India's ruling Congress party. "India has consistently opposed an arms race—but India will not be found wanting in taking all measures necessary for the effective safeguarding of its territorial integrity and national interests."

From the Arabian Sea to the Pacific Ocean, countries fearful of China's growing economic and military might—and worried that the U.S. will be less likely to intervene in the region—are hurtling into a new arms race.

In December, Japan overhauled its defense guidelines, laying plans to purchase five submarines, three destroyers, 12 fighters jets, 10 patrol planes and 39 helicopters. South Korea and Vietnam are adding subs. Arms imports are on the rise in Malaysia. The tiny city-state of Singapore, which plans to add two subs, is now among the world's top 10 arms importers. Australia plans to spend as much as $279 billion over the next 20 years on new subs, destroyers and fighter planes.

Together, these efforts amount to a simultaneous buildup of advanced weaponry in the Asia-Pacific region on a scale and at a speed not seen since the Cold War arms race between America and the Soviet Union.

The buildup is unfolding as the world's military balance appears to be shifting in tandem with its economic balance. China is beginning to build a military to match its powerful economy. This is happening as the U.S. and its staunchest allies, including Britain, are looking at flat or falling military spending—and as Russia is struggling to revive its armed forces in the post-Soviet era.

China is still far from challenging the U.S. for global military supremacy. But its recent actions have countries in the region planning for a much different future.

In Australia, a report published Monday by an influential defense think tank concludes that the China threat has sparked an "urgent need to refocus" military development "to offset and deter the rapidly expanding People's Liberation Army." The report by the Kokoda Foundation, prepared with input from senior defense officials, says Australia "cannot overlook the way that the scale, pattern and speed of the PLA's development is altering security in the Western Pacific."..

Riaz Haq said...

Here's a Counterpunch Op Ed by Yasmin Qureshi on "Militarization of India":

India is today the world's largest importer of arms. These include fighter jet planes, missiles and radar systems for strategic partnerships and geo-political power. India is also investing in security and surveillance to combat foreign threats and resistance from its own people in places like the Kashmir valley, and the North East and tribal regions of Central India. This provides tremendous opportunity for multi-national corporations to sell and invest in India, a country marching ahead as an economic and military power.

A report from the Stockholm International Peace Research Institute's (SIPRI) March 14, 2011 revealed that India received 9 per cent of the volume of international arms transfers during 2006–10. The international consultancy firm KPMG estimates that India will sign military contracts worth $112 billion by 2016.

This year India increased annual defense spending by about 11.6 percent to $36 billion in order to modernize the armed forces to counter the military inflation and strategic threats posed by China's rapidly expanding military capabilities..

In sharp contrast, allocation for agri culture and allied activities was reduced by 2 percent and allocation of non-plan expenditures on all social services declined by 14 percent from approximately $7.8 billion in 2009-10 to $6.6 billion for 2010-11. The World Bank estimates that 80% of India's population lives on less than $2 a day, comparable to sub-Saharan Africa.

Corporate Diplomacy to Secure Arms Deals

With assistance from their governments, arms corporations in countries such as Russia, US, France, Britain, Sweden and Israel are competing to procure million and billion dollar deals with India.

Last year India saw an unprecedented series of diplomatic visits from head of states of nuclear and defense powers. Notably chief executives of major nuclear and defense corporations had escorted the head of states on their visits. British Prime Minister David Cameron's visit to India in July was followed by US President Obama's in November and by French President Nicolas Sarkozy's in December.

A $779 million contract was signed for 57 BAE Systems Hawk advanced jet trainers for the Indian military during Cameron's visit. Engine maker Rolls-Royce clinched a $280 million deal to supply engines for the jet trainers for the Indian air force and navy. Seven agreements in key areas such as defense, space and nuclear energy were signed during Sarkozy's visit.

US President Obama and Secretary of State Hilary Clinton's visits in 2010 were also about strengthening economic and strategic partnerships. Twenty deals totaling nearly $10 billion dollars in U.S. exports were signed during the President's visit. Following that visit, the US reformed its export control regime and removed key Indian defense and civil space entities from U.S. restricted lists to help boost high technology exports and allow for enhanced defense and space cooperation with India.

The close nexus of corporations and governments is evident from the resignation of Timothy J. Roemer as US Ambassador to India on April 28, 2011, soon after the announcement that two US corporations, Boeing and Lockheed Martin had lost the race for procuring a $10 billion contract to supply 126 fighter jets to the Indian Air Force. The US is still hopeful a four billion dollar sale of C17 aircraft will be finalized soon. French company Dassault's Rafale and the Typhoon from the Eurofighter consortium (representing Germany and Spain, Britain's BAE Systems and Italy's Finmeccanica) have been shortlisted.

Riaz Haq said...

India's main planning body has said half a dollar a day is "adequate" for a villager to spend on food, education and health, according to the BBC:

Critics say that the amount fixed by the Planning Commission is extremely low and aimed at "artificially" reducing the number of poor who are entitled to state benefits.

There are various estimates on the exact number of poor in India.

Officially, 37% of India's 1.21bn people live below the poverty line.

But one estimate suggests the true figure could be as high as 77%.

The Planning Commission has told India's Supreme Court that an individual income of 25 rupees (52 cents) a day would help provide for adequate "private expenditure on food, education and health" in the villages.

In the cities, it said, individual earnings of 32 rupees a day (66 cents) were adequate.

The Planning Commission was responding to a direction from the court to update its poverty line figures to reflect rising prices.

India has been struggling to contain inflation which is at a 13-month high of 9.78%.

Many experts have said the income limit to define the poor was too low.

"This extremely low estimated expenditure is aimed at artificially reducing the number of persons below the poverty line and thus reduce government expenditure on the poor," well-known social activist Aruna Roy told The Hindu newspaper.

The Planning Commission also told the court that 360 million Indians are now being supplied with subsidised food and cooking fuel through the network of state-owned shops.

A World Bank report in May said attempts by the Indian government to combat poverty were not working.

It said aid programmes were beset by corruption, bad administration and under-payments.

Riaz Haq said...

If the past is any guide, it's quite safe to assume that Pakistan will continue to effectively respond to all military threats to its security and assert its power it nukes, missiles, satellites, fighter jets, drones, nuke subs, etc. Talking about India's nuke sub, it's just a matter of time before Pakistan launches its own nuclear subs to complete the nuclear triad. Let there be no doubt on this point.

When it comes to eating grass to build nukes, all of the available data from international sources shows that many Indians can't even find grass to eat, as hundreds of millions of Indians go to bed hungry every night.

Here's a quote from Times of India poking fun at the superpower claim:

With 21% of its population undernourished, nearly 44% of under-5 children underweight and 7% of them dying before they reach five years, India is firmly established among the world's most hunger-ridden countries. The situation is better than only Congo, Chad, Ethiopia or Burundi, but it is worse than Sudan, North Korea, Pakistan or Nepal.

Today India has 213 million hungry and malnourished people by GHI estimates although the UN agency Food and Agriculture Organization (FAO) puts the figure at around 230 million. The difference is because FAO uses only the standard calorie intake formula for measuring sufficiency of food while the Hunger Index is based on broader criteria.

Riaz Haq said...

Here's an AFP report on Pakistan arms imports:

China’s arms exports in 2008-2012 grew by 162% compared to the previous five years, with most of them — 55% — going to Pakistan.

“China’s rise has been driven primarily by large-scale arms acquisitions by Pakistan,” Paul Holtom, a research director at SIPRI said in a press release.

“A number of recent deals indicate that China is establishing itself as a significant arms supplier to a growing number of important recipient states.”

Pakistan has long been China’s key ally in South Asia. The report also named Myanmar, Bangladesh and Venezuela as importers of Chinese arms.

China has defended its rules on overseas weapons sales following the report. Foreign ministry spokesman Hong Lei said Monday that such sales follow domestic laws and UN guidelines.

Hong said weapons sales have to be justified by the legitimate needs of the recipient and must not harm peace, security or stability.

Islamabad confirms
The Inter Services Press Relations (ISPR) directorate, the public relations wing of the Pakistan military has confirmed that China is “one of Pakistan’s biggest partners” in terms of cooperation in the defence field.

In 2010, Pakistan signed agreements worth over $10 billion with China, many of which were linked to cooperation in the field of defence.

But the ISPR did not confirm whether China is the biggest partner and whether Pakistan’s imports most of its defense equipment from China.

“We have three major partners. These are the US, China and France.”

General (retd) Talat Masood, a defence analyst, said that his belief was that US continues to remain the main source of Pakistan’s defence hardware.

“I think given the ongoing military arrangements with the US, it is still Pakistan’s No 1 source for military hardware. This also includes money spent on military programs by the US government.”

Riaz Haq said...

Here's an Op Ed piece in The News by columnist Farrukh Saleem:

Myth 1: The allocation for defence is the single largest component in our budget. Not true. The single largest allocation in Budget 2013-14 went to the Public Sector Development Programme (PSDP). The second largest allocation in Budget 2013-14 went to servicing the national debt. The third largest government expenditure, including off the budget allocations, are the losses at public-sector enterprises (PSEs). Yes, the fourth largest government expenditure goes into defence.

Myth 2: The defence budget eats up a large percentage of the total outlay. Not true. In Budget 2013-14, a total of 15.74 percent of the total outlay was allocated for defence. PSDP and debt servicing were 30 percent each. What that means is that more than 84 percent of all government expenditures are non-defence related.

Myth 3: The defence budget has been increasing at an increasing rate. Not true. In 2001-02, we spent 4.6 percent of our GDP on defence. In 2013-14, twelve years later, our defence spending has gone down to 2.7 percent of GDP.

Myth 4: We end up spending a very high percentage of our GDP on defence. Not true. There are at least four dozen countries that spend a higher percentage of their GDP on defence.

They include: India, Egypt, Sri Lanka, the United States, the United Kingdom, South Korea, France, Eritrea, Oman, Saudi Arabia, Israel, Jordan, Liberia, Brunei, Syria, Kuwait, Yemen, Angola, Singapore, Greece, Iran, Bahrain, Djibouti, Morocco, Chile, Lebanon, Russia, Colombia, Zimbabwe, Turkey, Georgia, Guinea-Bissau, Ethiopia, Namibia, Guinea, Turkmenistan, Kyrgyzstan, Algeria, Serbia and Montenegro, Armenia, Botswana, Ukraine, Uganda, Ecuador, Bulgaria, Lesotho and Sudan.

Myth 5: The Pakistan Army consumes the bulk of the defence budget. Not true. In the 1970s, the Pakistan Army’s share in the defence budget had shot up to 80 percent. In 2012-13, the Pakistan Army’s share in the defence budget stood at 48 percent.

Now some facts:

Fact 1: The Pakistan Army’s budget as a percentage of our national budget now hovers around eight percent.

Fact 2: Losses incurred at public-sector enterprises can pay for 100 percent of our defence budget.

Fact 3: Pakistan’s armed forces are the sixth largest but our expenses per soldier are the lowest. America spends nearly $400,000 per soldier, India $25,000 and Pakistan $10,000.

Fact 4: Of all the armies in the world, Pak Army has received the highest number of UN medals. Of all the armies in the world, Pak Army is the largest contributor of troops to the UN peacekeeping missions.

Mark Twain once remarked, “Get your facts first, and then you can distort them as much as you please.”

Riaz Haq said...

11% hike in defence budget maintained

Pakistan has raised its defence spending by around 11% for the coming financial year as it sought to sustain the recent gains against terrorism and to counter external threats, mainly from India.

Interestingly, India also increased its defence budget by around 10% in March, although its size is six times bigger than Pakistan’s total defence outlay.

For year 2016-17, the government allocated Rs860.1 billion compared with Rs775. 8 billion spent by the three armed forces in the outgoing fiscal year, showing an increase of Rs85 billion.

Out of the whole defence budget, Pakistan Army gets 47%, 20% goes to Pakistan Air Force, while Pakistan Navy’s share is around 10%, according to defence ministry officials.

The budget document reveals that out of the Rs860.1 billion, Rs327 billion have been set aside for employees-related expenses, Rs216.1 billion for operating expenses and Rs211.7 billion have been earmarked for physical assets.

However, the figures do not include Rs177.6 billion allocated for pensions of retired military personnel that would be given from the civilian budget and a separate allocation for the security-related expenses.

Additionally, military would also be given Rs192 billion under the contingent liability and Rs100 billion out 170 billion under the Coalition Support Fund (CSF).

For the past four years, defence spending has shown an average annual increase of 11%. Military officials defended the increase insisting that Pakistan military’s expanses are lowest in the region given the volatile security environment.

The officials explained that army’s share in the defence budget is around Rs390 billion, which according to him, is less than 8% of the total national budget outlay.

They also claimed that despite the war on terror, Pakistan’s defence budget actually declined in terms of expansion of the national budget.

Since 2001, India’s defence budget has been jacked up from $11.8 billion to $52.2 billion in 2016-17 making it a leading defence spender in the world.

The military officials also argued that last year the maximum budget allocated for the army was spent on non-development expenses such as pay and allowances. Only 6% was left for development schemes.

Giving comparison of various countries on defence spending per soldier/annum, the military officials claimed that Pakistan spends $8,077 per solider annually, while India allocates $17,554, Turkey $31,184, Saudi Arabia $269,060 and the USA spends $426,814 per soldier annually.

Riaz Haq said...

Pakistan announces $9.6 billion defense budget

The defense budget for the next fiscal year is up 10.22 percent
India and China are among the world’s top five spenders on defense, with the former spending $45 billion
ISLAMABAD: Pakistan’s government has announced a defense budget of 1.1 trillion rupees ($9.6 billion) for the 2018-19 fiscal year, up 10.22 percent.

Defense expenditure is 21 percent of the total budget of 5.932 trillion rupees for the next fiscal year, and 3.2 percent of gross domestic product (GDP).

Finance Minister Miftah Ismail lauded the military’s sacrifices while presenting the budget in the National Assembly on Friday.

“Our military and paramilitary apparatus has fought hard and laid their precious lives for our country,” he said.

“The last hideouts of militants in North Waziristan have been eliminated through operation Zarb-e-Azb.”

Defense and security analysts link the increased defense budget to the devaluation of the rupee in recent months and subsequent inflation.

Defense analyst Amjad Shoaib said the increase is insufficient given the government’s claim that Pakistan is fighting militants without foreign assistance.

The military requires extra funds for border fencing and establishing forts along the border with Afghanistan, he added.

The defense budget does not include allocations for major planned military hardware acquisitions from the international market. It also does not mention expenditure on Pakistan’s nuclear and missile programs.

On Jan. 4, State Department spokeswoman Heather Nauert said the US was suspending its entire security assistance to Pakistan until it proves its commitment to fighting all terrorist groups operating in the region.

The US has withheld $350 million to Pakistan in security assistance, known as the Coalition Support Fund.

Retired Air Marshal Shahid Lateef said military expenses have increased manifold due to multiple engagements along the borders and within the country.

“Our military is faced with fifth-generation warfare, and it needs billions of rupees other than the defense allocations to deal with the threat,” he told Arab News.

Pakistan’s neighbors India and China are among world’s top five defense spenders, with New Delhi allocating $45 billion this year.