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Indo-Pak Military Expenditures and Global Trends

09 June, 2010

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Apart from P-5 countries, India, Saudi Arabia, Germany, Japan, and Italy have been grouped among the world’s ten top most countries, which spend maximum on their defence expenditures. Even under the moderate Democrat President Barack Obama, United States spends 53 percent of the global military expenditures.

Until 2009, US share in the global military spending was 43 percent. For the year 2010, it has increased another $47 billion in its defence budget, thus bringing the total volume of its defence budget to $ 680 billion.  Otherwise, over the last decade, there has been an increase in the military spending of almost all countries of the world.

According to Stockholm International Peace Research Institute (SIPRI), estimates, released on June 2, 2010, 1531 billion USD were expended on militaries as the defence budgets. Overall, there has been an increase of 5.9 percent in the defence spending during 2009, as compared to year 2008. However, there been huge increase in the military budgets since 2000. The estimated increase is 49 percent from year 2000 to 2009, which unprecedented after the demise of cold war.

This enormous increase in the defence budgets of the countries is almost everywhere. Even countries like Nigeria and Algeria has doubled their military budgets. “Kazakhstan has increased its defence spending by 360 percent, Azerbaijan by nearly 500 percent, the Democratic Republic of Congo by as much 663 percent.”  For the financial year, 2010-2011, India increased its Military budget by 34 percent. India is already in the list of top ten defence spenders. Pakistan however has increased its defence budget by 16.935 percent. In real term, this increase is less than 5 percent, once the over 12 percent inflation rate is incorporated into it.

This ignorable increase in the budget of Pakistan is primarily to meet the challenges of combating the militancy and terrorism along its western frontiers. This fact was amply highlighted by Finance Minister,  who said during the budget speech that, “We are facing a situation in which our armed forces, paramilitary forces, and security forces are laying down their lives ... They should know from this House that we all stand by them and that Security is our topmost concern”. In the wake of the ongoing counter insurgency operations, in FATA, KPK and parts of Balochistan Province, this increase is considered minimum essential. Indeed, a major chunk of the budget is expended on the pay, allowances, and maintenance expenditures of defence personnel and the current holdings.

As per SIPRI Year Book-2010, there has been a constant rise in the Indian defence budget since 2001. Following figures indicate this rise in term of billion US dollars ($ b);

Contrary to the Indian budget, there has been a decline in Pakistani defence budgets over the same period. In terms of billion US dollars ($ b) the volume of the successive budgets has been as: 

In-spite of the heavy volume of Indian defence budget, for the years 2010-2011, it has increased its defence budget by 34 percent.  Traditionally, there has been a rivalry between India and Pakistan, ever since they got independence in August 1947. Except a brief conflict between India and China in 1962, India has no adversary in either South or Southeast Asia. Currently India and China are widely cooperating in the field of economy and trade. The bi-lateral trade volume between these countries is over $40 billion. All border issues between them have almost been resolved. In the last sixty years, India has fought three wars with Pakistan. After disintegrating Pakistan in 1971, there has been no military engagement of Indian Military, where it could have expanded this much budget. Pakistan however, has been persistently engaged in the field of military. For its own safety and security, Pakistan had to stop Soviet expansion towards warm waters, after it invaded Afghanistan in 1979. Following the unfortunate incident of 9/11, it has become a front line state in the global war against terror. In the process, it has to fight an unending militancy and terrorism, still ongoing; indeed, the outcome of Pakistan’s partnership with West and US during the both campaigns. From the above-mentioned volume of the budgets, one can easily make out the difference in the military spending of both countries.   Indeed, there are no parallels between these two budgets.

As clearly reflected in the abovementioned estimates of an authentic organization (SIPRI), there has been a constant decline in the defence spending of Pakistan since 2001. It is now around 2 percent of the GDP as compared to over 4 percent in 1980s and over 3 percent in 1990s. Although, even this budget is unaffordable for the economically poor countries like Pakistan, but, in view of a constant Indian threat on the eastern borders and a state of war since last nine years along the western borders has necessitated this defence spending. Premier Yousaf Raza Gillani has recently said that, “We remain concerned over Pakistan-specific Indian military doctrines such as the cold start envisaging a limited conventional war under the nuclear overhang, huge increase in the Indian military budget and massive weapon acquisition.”

As per the Military Balance 2010, issued by the world’s renowned British Think Tank; IISS, economic growth in India fell to 7.3 percent in 2008, after attaining excellent average growth rate of 8.75% annually in previous five years. It has fallen to less than 6 in 2009. Nevertheless, despite the tight fiscal background, Indian has not reduced its defence spending. Rather, from 2000 to 2009 the defence budget has been enhanced to 50% in real terms. After the Mumbai attack, November 2008, the defence was increased to another 21%. Furthermore, the immediate impact of the Mumbai attacks can be seen in revised budget figures for 2008, which included a 32% increase in spending by the army over its original allocation. This Indian heavy defence spending has been pointed out by both the Asian Development Bank and the IMF. They have even warned that India’s large and persistent budget imbalance threatens fiscal sustainability, and they have urged the authorities to consider a new, stronger budgetary framework when the existing Fiscal Responsibility and Budget Management Act (FRBMA) expire in 2010. However, in 2010 budget, there is another increase of 34 percent in the Indian defence Budget in real terms.

This heavy Indian Defence expenditure, six times more than the Pakistani budget is primarily being expended on the modernization of its three services. The particular attention is being given to Indian Air Force and Navy. Through the enhancement in its naval and air power, India intends achieving the absolute military superiority over Pakistan, which Indian Army could not get in spite of its being two times more than Pak Army is. India is adding latest submarines having the nuclear capability in its naval fleet. These include the sophisticated Akula class and French origin submarines. India air force equally being modernized through the purchase of MiG 35 and F-16/18 aircraft. Its Army is following the Cold Start Doctrine against Pakistan and has more recently threatened to fight a limited war under nuclear overhang. It has even hinted to fight two fronts war against China and Pakistan simultaneously.

In mid 1990s, Indian Defence Ministry has laid down the criteria that its defence industrial base should be able to produce 70 percent military hardware indigenously. However, till-date, it is only able to only 30 percent of its defence needs and that too in a highly uncertain state.  From year 2001 onwards, Indian private sector has been incorporated in the defence industry, but it too has not yielded positive results. In its revised policy, Indian Defence Ministry has introduced new measures to enhance its indigenous industry.  These measures include; 26% investment in domestic defence production by overseas defence companies; publication of defence procurement procedures, which favours the indigenous research and development programme, and introduction of an offset policy, stipulating that the defence contracts of more than Rs. 3 billion must provide offset to the value of 30% of the deal.

Although India is still importing bulk of its defence products, but it is more emphasizing on the technology transfer, rather the simple purchase. Its defence companies are now producing the defence equipment of Russian and Israeli origin under licence. Production of T-90 tanks and Su-30MK1 fighter aircrafts are the practical example of high-level cooperation. After Russia, Israel has become number two partner of the India in defence cooperation. Over the last few years, Israel has provided, “a wide range of military equipment, including Phalcon airborne warning and control (AWAC) aircraft, Barak missiles, unmanned aerial vehicles (UAVs) and Tavor rifles.” Besides, a number defence deals took place between two countries during- 2009, particularly in the wake of Mumbai attacks.

Through a deal Indian Navy procured five aerostat-programmable radars from Israeli Aerories space Industries (IAI) for plugging the gap in the Indian coastal security system. India also launched the IAI made all weather imaging satellite in April 2009. Through a recent bid, India has concluded a deal of 1.4 billion USD for the procurement of medium-range surface to-to-air missile system with IAI. Indian DRDO and Israeli IAI are working in the close cooperation to develop an air defence system, “capable of detecting and destroying hostile aircraft, cruise missiles, and surface-to-surface rockets at a range of 70–80km.”

Under these real time threats looming along its eastern borders and involvement of Pakistani Security Forces all along the Western Borders, and other internal fronts, Pakistan cannot remain aloof to its defence needs.  It has to match or at least maintain minimum credible deterrence to its adversary. For the maintenance cost and the updating of its arsenals, it need minimum defence budget. The Government of Pakistan has realized the essentiality of these requirements, thus made the defence allocation to keep its forces worthy to fight the tough challenges ahead. As frequently stated by the incumbent Chief of Army Staff, General Ashfaq Pervaz Kayani, nation’s support is mandatory for the success of its military, both internally to fight militancy and externally to defend the geo-graphical borders.