Changing contours of Indian defence expenditure

Past as prologue?

Authored by: Laxman Kumar Behera

Handbook of Indian Defence Policy

Print publication date:  October  2015
Online publication date:  October  2015

Print ISBN: 9781138939608
eBook ISBN: 9781315674742
Adobe ISBN: 9781317380092


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For about 15 years after independence, India’s defence expenditure remained at a modest level, hardly touching 2 per cent of the country’s Gross Domestic Product (GDP). The modest spending on defence was the consequence of the nation’s focus on economic development and also the political leadership’s belief of no major external threat to the country, except from Pakistan. The 1962 border war with China that led to India’s humiliating military defeat belied New Delhi’s benign security perceptions towards Beijing and caused a sharp increase in defence spending. The first post-1962 war budget was more than double the preceding year’s allocation and the actual expenditure in that year amounted to 3.5 per cent of the GDP – a height never scaled again in independent India’s over 65 years of history. 1 Since then, there have been occasional spurts in defence spending – like during the 1971 war with Pakistan, which led to the creation of Bangladesh, and in the mid-to-late-1980s – but the budgetary growth rate has mostly remained subdued. Over the last several decades, the defence budget as a percentage of the GDP has witnessed a near continuous fall from a high of 3.3 per cent in 1987–88 to less than 2 per cent for consecutive five years since 2010–11. This fall notwithstanding, Indian economy’s rapid progress since early 1990s has ensured that the defence’s modest share in GDP amounts to a large budget in absolute terms.

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