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MILITARY BUDGETS in INDIA and PAKISTAN

Military-Budgets-India-Pakistan-Trajectories-Priorities-Risks-Oct2016.pdf

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1995<br />

1996<br />

1997<br />

1998<br />

1999<br />

2000<br />

2001<br />

2002<br />

2003<br />

2004<br />

2005<br />

2006<br />

2007<br />

2008<br />

2009<br />

2010<br />

2011<br />

2012<br />

2013<br />

2014<br />

2015<br />

USD millions, constant 2014 prices<br />

Military Budgets <strong>in</strong> India <strong>and</strong> Pakistan: Trajectories, Priorities, <strong>and</strong> Risks<br />

F<strong>in</strong>ally, domestic political factors make it highly unlikely that this trend will be reversed anytime<br />

soon.<br />

India’s defense budget is grow<strong>in</strong>g at an impressive clip, but ris<strong>in</strong>g personnel costs are<br />

crowd<strong>in</strong>g out resources for modernization. S<strong>in</strong>ce the mid-2000s, an <strong>in</strong>creas<strong>in</strong>g share of India’s<br />

defense budget has been dedicated to pensions <strong>and</strong> personnel costs, while capital outlays –<br />

<strong>in</strong>vestments <strong>in</strong> weapons systems – are decreas<strong>in</strong>g relative to the rest of the budget. Between 1995<br />

<strong>and</strong> 2015, India’s defense budget grew, on average, over 5.5 percent annually (see Figure 2). 13<br />

Draw<strong>in</strong>g on India’s impressive economic growth, the country has gone from a contested regional<br />

power to one of the preem<strong>in</strong>ent regional powers along with Ch<strong>in</strong>a <strong>and</strong> Japan. In 2015, India’s<br />

defense budget topped $51 billion, mak<strong>in</strong>g it the sixth largest <strong>in</strong> the world. 14 India’s defense<br />

spend<strong>in</strong>g accounted for three percent of <strong>in</strong>ternational defense spend<strong>in</strong>g <strong>in</strong> 2015. In contrast,<br />

India’s share was just over one percent <strong>in</strong> 1995. 15 In short, India’s military profile has never been<br />

higher.<br />

Figure 2: Grow<strong>in</strong>g Indian Defense Spend<strong>in</strong>g 16<br />

60,000<br />

3.5%<br />

50,000<br />

40,000<br />

30,000<br />

20,000<br />

10,000<br />

-<br />

3.0%<br />

2.5%<br />

2.0%<br />

1.5%<br />

1.0%<br />

0.5%<br />

0.0%<br />

Defense spend<strong>in</strong>g<br />

Defense as % of GDP<br />

13 The defense budget data were obta<strong>in</strong>ed from SIPRI, “SIPRI Military Expenditure Database,” while the<br />

<strong>in</strong>flation figures were obta<strong>in</strong>ed from IMF, “World Economic Outlook.”<br />

14 SIPRI, “Military Expenditure Database,” <strong>and</strong> IISS, “Chapter 2: Comparative Defense Statistics,” The<br />

Military Balance, 2016.<br />

15 Ibid.<br />

16 SIPRI, “Military Expenditure Database.<br />

13

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