 "China's defence budget soars, can India match up with its military might?")
Since the end of the World War II, the United States has been the top military power in the world. However, China’s rapid growth is tipping the scales in the latter's favour. The Chinese military expenditure is not only outstripping that of the US allies in the Indo-Pacific but also other significant spenders like India, Vietnam, and Indonesia in the region. In turn, these investments are manifesting in the increased size and strength of China’s armed forces.
Beijing realises this, and is making bold moves against the US allies and other direct neighbours in the region. The question then is, what could be a reasonable set of assumptions to evaluate what China spends on its military and how could the countries in the region, including India, align their resources to achieve comparable parity with China.
China’s military expenditure
China’s publicly announced defence budget this year stands at $236 billion. Its allocation this year increased by over 7 per cent; the 30th consecutive year it has risen. As a proportion of the GDP, it amounts to 1.2 per cent, which is below the global average of 1.8 per cent. When off-budget allocations to its paramilitary organisations and Coast Guard, defence research and development, pensionary benefits, and counter-terrorism duties are added, the total expenditure is estimated at $310 billion.
When this figure is adjusted in terms of purchasing power parity (PPP), the total military spending is assessed at $574 billion. And, if corporate funding in defence research and development, and other industry-related initiatives are added, this adds up considerably to China’s annual budget. Therefore, some experts argue that China’s spending is equivalent to $711 billion, nearly approaching the US levels of military expenditure at $875 billion this year.
Taylor Fravel, George Gilboy and Eric Heginbotham, in a recent article, in War on the Rocks, however argue that China’s 2024 military spending, including its off-budgetary allocations, adjusted for PPP is no more than $417 billion. More sober estimates indicate China’s military spending to be no more than 27 to 33 per cent higher than its official budget; thus pegging it at about $314 billion. Suffice to say that a flawed estimation of China’s overall military budget can lead to an over-investment or under-investment in military capabilities required to counter China.
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Establishing priorities
The shifting scales of Chinese military expenditure are setting off alarm bells in the region. Consequently, many countries in the Asia-Pacific, in attempting to field the right military capabilities, are trying to rethink and replan their defence-investment strategies and industrial developmental plans, alongside significant increases in their annual defence allocations.
Two aspects are important. First, arms acquisitions are discretionary expenditures of the state, while developmental works are obligatory expenses. If the state chooses to restrict its arms acquisitions budget, it might become militarily weak. However, if the state does not prioritise its socio-economic growth, it will not only become economically weak but then also find it difficult to militarily secure itself.
The choice is to decide between these two conditions. Soviet Russia, in the 1990s, was a strong military-industrial State, with misplaced developmental priorities. China on the other hand, is an illustrative example of exponential socio-economic growth, and its increased capacity to allocate surplus capital to discretionary expenditure for building its military capacity. This, explains the wide gap in defence allocations between China and India.
And second, for far too long, India has been using an inaccurate method of GDP share to its defence forces, as an indicator, to assess its ability to buy weapons. This, rather, imprecise method of analysing allocation ratios to country’s defence budgets, to explain rival capacities and potential to build military capabilities, has marred the security sector debate in India.
India’s defence budget allocations have ranged between 2 to 3 per cent of GDP while defence experts have been seeking allocations of 3 per cent to military expenditure, assuming that an increase in budgetary allocations will build hard power for national security. This argument has little basis, without exploring the scale of future military threats or costs involved. Additionally, GDP allocations are subject to fluctuations due to inflation, recession, pandemics, and other financial shocks.
Moreover, since arms acquisitions require policy coherence and predictability in long-term financial planning, exclusive reliance on GDP allocation ratios, as a yardstick, to explain capacity building, lacks logic and consistency. This underscores the need to have a better criterion to resource India’s military modernisation needs.
Budgeting criterion
Former SIPRI Arms Procurement Project Leader, Ravinder Pal Singh in a working paper titled, Essentiality of Resilience for National Security in 21stCentury, published by Policy Perspectives Foundation (PPF), argues that relying on percentage of GDP allocations to assess growth in military capacity, might not yield the right results. Instead, it might be more prudent to use per capita income (PCI) to assess India’s real potential for arms acquisitions. In his view, a more stable and reliable indicator of budgetary allocations can be developed by combining GDP allocation ratios with the per capita averages of a country.
Studies show that a higher net GDP and per capita income, both combined, are a more accurate proxy to explain a country’s military capacity. Higher per capita income countries have higher standards of education and better diffusion of technology. This allows better mobilisation of military manpower to operate weapons and systems, innovative use of technology, and maintainability of equipment. In terms of industrial resilience, higher per capita allows higher levels of precision engineering, defence manufacturing, and convertibility of dual-use technologies to military use.
South Korea, Saudi Arabia or UAE with lower GDP, but higher per capita income, can equip themselves with weapons and technology that India cannot afford. India with its large GDP, but weaker per capita, has limited resources at its disposal to spend on discretionary acquisitions. As a case in point, India’s decision to buy 126 Rafael aircraft had to be pruned to 36 aircraft due to financial constraints, while UAE placed an order for 80 Rafael jets in 2021, facilitated by its higher per capita income (18 times that of India), when its GDP is just one-eighth the size of India’s GDP.
Similarly, the United Kingdom, France, and Germany, which are similar sized economies as India yet higher per capita income, have a higher capacity to acquire weapons and build technology. In February 2022, when Russia invaded Ukraine, Germany spiked its military budget to $102 billion within one month of the commencement of the war. This was financially feasible for Germany because its national per capita is one of the highest in the world.
While the allocation of standard GDP percentage ratios to defence can assure routine maintenance and upkeep of war-fighting capacities, these are not necessarily a sufficient condition to deter a formidable adversary like China. Instead, a higher PCI is a more useful indicator and important contributor to build technology, or scale up military capacities.
Building capacity
A two-front threat complicates the financial fine tuning of India’s capability needs, and in turn muddles the policy debate and wider public opinion. Therefore, what weapon platforms India should prioritise have to be a conscious policy choice. Each choice comes with an affordability tag, which limits India’s choices and options.
A straightforward approach would be to invest in military technologies at two basic levels. First, to continue to invest in six major weapon platforms, which constitute the backbone of any modern military force and are indispensable to deter, or defeat military threats. These include -- the combat aircraft, helicopters, ships, submarines, tanks, and artillery systems, including rockets, and missiles. These conventional platforms provide the bare minimum staying power in any conflict, not necessarily the winning edge in combat.
Second, to concurrently invest in technologies that provide an asymmetric edge in future military engagements. Enhanced situational awareness and decision-making, increased precision and accuracy, and improved survivability and lethality have acquired a new meaning in modern combat. Six broad technologies fall into this category, namely space-based intelligence, reconnaissance and surveillance (ISR) systems, autonomous systems, long-range precision fire and hypersonic weapon platforms, quantum computing and encryption, cyber security and electronic warfare platforms, and joint war-fighting command and control systems. These platforms have become an absolute must on a modern battlefield.
As these technologies evolve, their cost, effectiveness and innovative application would become an essential criteria to identify future force designs and employment concepts. These military technologies will have to have commercial applications, in order to achieve economies of scale and defence affordability.
Difficult choices
A country with a large GDP can maintain a number of basic major military platforms. However, to maintain a qualitative edge in conflict, the country requires a higher PCI to sustain its military capacity to counter and defeat any credible threat, while retaining sufficient resources to replace equipment losses on the battlefield. Also, as the pace of generational changes in military technology gets faster and shorter, a higher per capita income can help acquire superior military means to keep pace with generational changes. A higher PCI is also necessary to acquire new weapons, C3ISR capabilities, with superior technical characteristics to those deployed by formidable adversaries or non-state actors.
However, India’s policy handicap has been that we like to be seen investing in big-ticket defence projects, rather than building capacity in foundational and advanced technologies. Foundational technologies are the key to dual-use applications, including military platforms. In their absence, the risks to defence research, development, and production are not spread out, which in turn inhibits the introduction of advanced technologies and innovation.
While India’s defence manufacturing space is expanding, it continues to face major hurdles to match up with the Chinese defence industry in scope and scale. To compete with China, we need to hasten industrial reforms, streamline the acquisition processes and break down the silos between private and government sectors to foster better collaboration and innovation.
Therefore, three aspects merit attention. First, India’s policy-makers have to enable sustained socio-economic growth to ensure strong budgeting pathways in defence. Second, the fusion of civilian and military-industrial bases is essential to offset defence research and development, and high production costs. And third, strengthening of the national strategic planning processes to readily accept and absorb rapid shifts in military technology.
Unless the military planners impress upon India’s political leadership to ensure consistency and coherence in defence investments and defence industrial growth, it will continue to lag behind in military technology and war-fighting capacities to deter China.
(The writer is a former corps commander)
Disclaimer: These are the personal opinions of the writer. They do not reflect the views of www.business-standard.com or the Business Standard newspaper