The budget for the next year is the most anticipated event before the end of a fiscal year. On February 2, 2023, the budget was announced with allocations for each department, including defence. The Defence sector has been allocated a budget of Rs. 5.94 lakh crores ($72 billion).
The increase in the defence budget is crucial for India’s security, especially amid recent stand-offs and skirmishes with China in the past few years. But shockingly India has reduced its defence spendings.
As of 2021, the defence expenditure of India was 2.7 percent of the GDP. The estimated GDP by the government for 2023 is $3.5 trillion and the allocation of $72 billion is just 2.057% of GDP.
If we compare India’s defence budget to other countries, we actually get to know that India is lagging behind.
While Russia allocates 4.1% of its GDP towards defence, Pakistan, despite its financial struggles, still spends 3.8% of its GDP. The US, with a defence budget of $773 billion, spends 3.5% of its GDP on defence. Other countries, such as the UK, France, China, Germany and Japan, have a lower defence spending percentage compared to India.
The European Union framework limits the defence spending of France and Germany to maintain their defence strength, while the UK’s geo-political issues are more focused on diplomacy than military. Japan has recently increased its defence spending due to the Russia-Ukraine war and this will be reflected in its upcoming budget. China, with a GDP of $17.73 trillion in 2021, allocates only 1.7% of its GDP towards defence, equating to $301.41 billion. It is important to note that the defence spending of countries like China and the US cannot be solely judged by their spending percentage as they have large GDPs.
Also read: Modernization of Indian defence: Right trajectory but low velocity
Awaited revised estimates
Comparing the above facts, it is clear that India’s current defence budget is 10 times less than the US’s budget in 2021 and 4.2 times less than China’s defence budget for the same year. While the overall budget is a positive step, the allocation towards defence is not only low but also disappointing. The expectation was that the government would allocate $100 billion towards the defence sector, but this goal was not met.
Historically, India has increased its defence allocation in revised estimates. With a low budget allocation this year, there may be room for an increase in the third or fourth quarter. However, the initial budget allocation still holds more impact than the revised estimates.
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