China defence spending way ahead of India; 12.5% budget hike at best modest!

Info Graphic: Pankaj Sharma/Zee Research Group/Delhi

Story Intro: In his maiden budget, Arun Jaitley raised defence allocation by 12.5 percent over the last full budget (2013-14) presented by P Chidambaram in the UPA government. However, this rise in defence expenditure is nowhere close to bridge the gap with China. A latest report by Axis Capital shows that India needs to increase its defence expenditure by 30 percent every year over the next ten years to match China. India’s defence budget is now pegged at about USD 38.3 bn. According to the report, “Indian defence expenditure is way below China’s annual expenditure of USD 100 bn”. On the other hand, India`s military budget is still less than a third of China’s USD 145 billion expenditure last year estimated by the Pentagon in its report to the U.S. Congress this month. The official government defence budget covers only a proportion of China’s total military spending. There is little transparency in the budget, which is disaggregated into just three major categories: personnel, training and maintenance, and equipment, usually in roughly equal proportions. Stockholm International Peace Research Institute (SIPRI), Sweden-based international think-tank estimates that total Chinese military spending is about 55 percent higher than the total central and local defence budget. For example, SIPRI’s estimate for China’s military spending in 2012 was 1049 billion yuan ($166 billion), compared to the official defence budget of 669 billion yuan. A Zee Research Group (ZRG) analysis shows that in the last ten years, the spending on defence in India has witnessed an average growth of about 12 percent. It means the central government needs to walk the extra mile. The hike in defence expenditure over the previous year by the NDA government is better than most years of UPA government. However, when Pranab Mukherjee presented the UPA-2 government’s first budget in 2009, the expenditure on defence was hiked by 34.2 percent, which is the highest in the last ten years. Due to meagre funds in budget, the helplessness of defence ministry was witnessed recently. In February this year, former Defence Minister AK Antony stressed that major projects have to wait due to shortage of money. Moreover, the spending of defence funds also come under scrutiny recently when former Finance Minister P. Chidambaram suggested that the Defence Ministry was not spending the funds “wisely” enough and contended that the maintenance of the military assets was being neglected.