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India's Defence Budget: Fight Currency Devaluation or Fight Pakistan?
By Ahmed Quraishi

The Indian military is facing a moment where it has to choose between fighting the debilitating effects of a slow economy after 2011 versus the pursuit of a largely Pakistan-specific military buildup.

With the slowest GDP (3.2% in 2012 and less than 5% in 2013) in a decade, India's military managers face tough choices. They have to balance a weak Indian rupee with the payment of salaries and pensions and the procurement of enough weapons to project power against neighbours, especially Pakistan and China.

The choices are tough for the country's financial managers as well. The government led by Prime Minister Manmohan Singh, a reformer, has chosen to give priority to military expenditure over the more pressing task of jumpstarting the Indian economy. Most of the new military budget allocations go to satisfy Indian military's appetite for projection of power in the immediate neighbourhood outside national borders. India does not face any immediate threat from any neighbour beyond border and water disputes with Pakistan and China that can be resolved through talks. But New Delhi has all but closed that door with Pakistan and is not showing any particular urgency to resolve disputes with China. To be fair, Islamabad, New Delhi and Beijing have increased their military budgets recently with varying proportions. Notwithstanding, Indian jump on the defence budget ladder is too big, too high and threatening to the regional countries. In Pakistan's case, the fresh allocations are closely linked to fight a domestic terror threat inspired by the mismanaged U.S.- and NATO-led war in Afghanistan. In China's case, Beijing's military preparedness is more focused on the situation in East China Sea, transnational terror threats to its western borders, and militarization of the Indian and Pacific oceans. In India's case, predictions about a Chinese threat are exaggerated and are often linked to United States' policy of encirclement of China, a policy that India need not subscribe to.

On February 17, 2014 Indian Finance Minister P. Chidambaram announced a 10% increase in India's defence budget, taking it to a staggering $36.3 billion. The new allocations are temporary and could be changed by the new government after the general elections in May. The new allocations include an increase of 3.3% for new weapon purchases and a rise in the pensions of nearly three million retired military personnel who were left out in an earlier increase in 2006.

This is a very interesting development for India watchers. Less than four months to a new government after elections in May, the last major move by the outgoing government of Prime Minister Singh is to bolster defence expenditure. This move says a lot about India's immediate priorities.

Many would argue this is not the best of times for India to indulge in unnecessary and cosmetic defence buildup not justified by any immediate threat. Moreover, such militarization could have been ignored by neighbours had India made progress in resolving major disputes. But India is not engaging any of its neighbours at the moment in tension-reduction steps, like lowering non-tarrif barriers to trade in Pakistan's case, for example, or the resolution of smaller disputes like Siachen and Sir Creek.

In Kashmir, tensions have risen again after a recently conducted cricket match between Pakistani and Indian teams resulted in harassment and expulsion of Kashmiri students studying at Indian universities. The students are accused of cheering for the Pakistani team and have been charged with treason. Most of the times, Indians have successfully beguiled the world and concealed their true face with cliches like non-violence, largest democracy and peaceful yoga, but such like events exposed true ugly face of narrow-minded Hindu chauvinism. The world at large, and Pakistanis in particular must anticipate the dangers of rising Hindu extremism. It is not so peaceful in the land of non-violence.

Under these circumstances, India's pursuit of militarization stokes mistrust.

The Indian militarization drive, including the purchase of nuclear-powered submarines, spy drones, and aircraft carriers continues unabated despite the country's rising economic troubles. India has disappointed domestic and international investors with less than 5% growth rate in seven consecutive quarters up to December 2013. The Indian rupee has lost more than 10% of its value to U.S. dollar, and Foreign Direct Investment has slumped considerably. In November, the Standard & Poor's warned that India's rating could be downgraded if its economy was not back on track after the May election.

The prospects for the immediate future remain bleak. The laundry list that leads to pessimism is long:

  •  Turmoil and instability in Indian politics.
  • The possibility that India might have a new Prime Minister after the general elections accused of genocide.
  • The gang-rape epidemic that has dented tourism and impacted the country's reputation. 
  •  Refusal to resolve serious disputes with Pakistan. 
  •  Inability to reduce tensions inside Indian-occupied Kashmir.
  • The country's stubborn attitude in trade negotiations with the United States and the European Union.

To be sure, the economic woes have slowed down the feverish Indian weapons procurement programme. The 3.3% increase for weapons purchases this year is dwarfed by last year's 9% hike.

Besides a slowing economy, there are other reasons for this year's humbled budgetary allocations for new arms.

For example, the Indian military was criticized domestically and embarrassed internationally with an increase in the number of accidents affecting the newly acquired nuclear-armed submarines. The latest accident occurred on February 25, 2014, when a Russian-made submarine, renamed INS Sindhuratna, caught fire at sea and two officers were killed.

According to a report titled, 'Frequent Accidents in Indian Navy' by Osman Khan in The News International on March, 4, 2014, "This has been the 10th accident involving Indian Naval platforms, three out of them being submarines in the last seven months. In August last year, another Indian submarine of the same type, the INS Sindhurakshak, sank alongside while carrying out pre-sea departure checks or extended deployment probably on the Pakistani coast."

Critics in the Indian media chastised the military for rushing to buy nuclear-armed submarines without sufficient parallel training in operation and maintenance. India is deploying its new submarines along important international trade and oil shipment sea routes. A large part of this Indian Naval power projection is happening close to Pakistani seas. The possibility of an accident involving an Indian-run nuclear submarine in the Indian Ocean, Bay of Bengal and near the Arabian Sea is high.

India's ambitious Mars probe is another military-led project that has attracted criticism inside and outside the country, mainly for demonstrating lopsided priorities in a country that remains home to world's largest concentration for poverty and health issues.

All of these developments could have played a role in India's decision to lower its budget for new weapons purchases even as it jacks up the defence budget to pay for salaries and pensions of servicemen and offset the cost of a devalued rupee and a slowing economy.

But the question remains: Will India give priority to its economy, poverty alleviation and social issues over an ambitious weapons procurement programme and power projection? The jury is still out on this.


Ahmed Quraishi is a senior research fellow at Project for Pakistan In 21st Century, an independent think-tank based in Islamabad. He can be reached at [email protected]

 (Courtesy Hilal Magazine)

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