$73 billion budget

Every year on the 15th of August, on India’s Independence Day, we show off new arms and ammunition acquired. We show off our military strength with immense pride. For FY 2020 – 21, India’s defence budget was $73.65 billion amounting to 2.1% of the GDP. We are now the third biggest spender on defence in the world after the USA and China.

But with so much poverty, bankruptcy and a sinking economy, I have an important question to ask. Does India REALLY need such a huge defence budget?

Probably not. But, a very large portion of this budget is spent on pensions. In fact, in the 2020-21 defence budget, the pension bill was almost $18 billion. And if you cut these pensions, you deprive the soldier of a livelihood who risked their lives for the country. This expenditure is essential for the wellbeing of these bravehearts, as an expression of gratitude for all they’ve done. So cutting out pensions is a no go, even from a vote bank stance.

So if we are spending so much money on defence and still aren’t well equipped to protect ourselves from our neighbours, then we aren’t getting a return on our investment.

Then how can the government ensure we optimize our defence budget?

The government should invest more money in acquiring advanced technology and increase capital expenditure. This will, in turn, will lead to the reduction in the need of soldiers in the future. Encouraging local development of equipment will also provide employment opportunities in the country and prevent an outflow of funds. Along similar lines the government recently announced an embargo on 101 defense equipment and now expects to manufacture this in India.

Geopolitical tensions prevent India from reducing its defence budget. Constant risk of border tensions with Pakistan and China has led to an increase in our cavalry. Modernization of our weaponry and equipment is the only way to reduce costs and have a more efficient and well-equipped force.

The opportunity cost of spending on defence

India spends a meagre 3% of GDP on Education, while countries like America spend around 6%. India has an extremely young demographic and students are the future of this country. Spending on education is something the government should work on, instead of defence. 

There is no right answer on how much India should spend on defence. With one of the largest populations to protect and regular clashes with its neighbours, the budget might be justified. However, as stated earlier it India has more important areas of investments to attend too.

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