It is that time of the year when the budget exercise commences for the next financial year. It is also the time for fresh debates on the guns versus butter conundrum. The defence of the nation has been, and will remain, the first and foremost priority of any government, as defence cannot be outsourced. The question that remains is: how much should a nation spend towards defence in the face of equally pressing requirements—healthcare and education to infrastructural development?
It is not an easy question to answer, particularly when a section of the polity is convinced that defence expenditure is a sunk cost in an era where armed conflict is supposedly remote. Both are dangerous assumptions in the context of national security.
More threats, more allocation
A country decides how much is enough depending on the threats it faces, both external and internal. Defence expenditure can be likened to an insurance premium. The greater the risks to be covered, the greater the premium. Similarly, the greater the number of threats a nation faces, the more it will have to allocate in terms of the defence budget. There is one major difference, though. While the insurance kicks in only after an untoward incident has occurred, the premium paid in terms of the defence budget can prevent an incident from happening in the first instance. The premium in itself is the deterrence.
Ukraine is a case in point. Even in the face of growing threats, it did not adequately prepare its armed forces. The lack of adequate deterrent emboldened Russia to launch its “Special Military Operation”. Since the conflict began, Ukraine has received more than $75 billion in aid from the United States alone, out of which 61 per cent is military aid. If the assistance provided by other NATO countries were to be included, this figure easily crosses the $100 billion mark. A fraction of this spent on building up the required levels of deterrence could have possibly averted the Russian invasion in the first place.
However, that is not all. The war has left in its wake a trail of death and destruction in Ukraine. The entire country has been devastated, not unlike Germany at the end of World War II. Estimates differ and are only growing as the war drags on. A March 2023 report puts the cost of reconstruction at $411 billion for the damage caused during the first year of the war alone. This does not even take into account the human cost in terms of total killed and wounded, both civilian and military, and the over 10 million people displaced internally and externally. If only a fraction of this colossal amount had been spent on defence, a disaster of this magnitude, if not totally forestalled, could at least have been mitigated. Against this backdrop, India would do well to pragmatically reassess its national security needs.
Defence allocation is no ‘sunk’ cost
Another fallacy is that monies spent on defence are sunk costs. In actuality, both the capital and revenue expenditure incurred by the armed forces spur the economy, and, in fact, give a good return on investment. Of the Rs 5.94 lakh crore allocated for defence expenditure in FY 2023-24, capital outlay pertaining to modernisation and infrastructure development accounts for Rs 1.63 lakh crore. Seventy-five per cent of this has been earmarked for the domestic industry, which is roughly Rs 1 lakh crore. In effect, this much of the outlay is being ploughed back into the economy, creating employment opportunities and spurring growth.
Every single order given to an Indian company benefits the local ecosystem, especially the micro, small and medium enterprises (MSMEs), which are the feeder units for the bigger players in the military-industrial complex. This trickle-down effect benefits a large segment of the population scattered all over the country. These orders given by the armed forces are contributing to wealth creation. To quote one example, the share prices of Hindustan Aeronautics Limited have risen from around Rs 1,180 on 22 October 2022 to Rs 2,052 on 23 September 2023, a gain of approximately 42 per cent in one year. This would, in turn, translate to more bonuses for their workers and better dividends to the shareholders. The armed forces get the equipment needed for modernisation, and the companies get their profits—a win-win situation for all.
The same is true for revenue expenditure, a large chunk of which goes into Maintenance and Operating (M&O) expenditure. All the equipment in the inventory has to be maintained to keep it battle-worthy, and most of it is continuously in use along our borders on land, sea and air. Troops have to be housed, clothed and fed. All these myriad activities are sourced from the local market, from stationery to spares, clothing to condiments. Small-time traders in the vicinity of military establishments are the beneficiaries, as is evident from the large number of shops dealing in military requirements.
Since units and establishments are located in all parts of the country, the benefits, too, are spread out, including to the remotest rural communities and border areas. ‘Vocal for Local’ is not just an empty slogan but is espoused strongly in letter and spirit. A number of contracts are given to local cooperatives in the border areas, even though prices might be marginally higher than what is available in the plains. Most of the Army requirements in Arunachal Pradesh are sourced through the Jang Large-Sized Multi-Purpose Cooperative Society Limited. Similarly, many of the requirements in Ladakh are met through local ventures, thereby greatly benefitting the local population.
The local populations, particularly in border areas, recognise the advantages of having military garrisons in or near their towns and villages. This is not only because of enhanced security but also due to the resulting economic prosperity. This is borne out by the fact that whenever discussions about relocating a particular unit arise, local communities vociferously protest such moves to the point that their concerns even reach the floor of Parliament.
Increased allocations for defence should be seen through the prism of peace and development, with expenditure considered as an investment that yields handsome returns. Peace is a prerequisite for development, and it can only prevail if we remain prepared for war. For an ‘Atmanirbhar Bharat’, there has to first be a Bharat.
General Manoj Mukund Naravane PVSM AVSM SM VSM is a retired Indian Army General who served as the 28th Chief of the Army Staff. Views are personal.
(Edited by Zoya Bhatti)