Indian Defense Spending: Treading Water in the Fiscal Deep

Abstract

Several years ago some concern was expressed in the Asia-Pacific region about the rapid rise in Indian defense expenditure. Even the Pentagon assessed that India was on an upward trajectory in terms of its rise to power in the region, a trajectory that would leave it positioned to exercise a significant degree of power throughout the Indian Ocean by 1995. In recent years, however, Indian defense spending has plateaued and even fallen in real terms, and regional leaders outside South Asia no longer express concern about India's potential role. But this fall in expenditure does not mean that the process of military modernization in India has ceased, or that New Delhi has assessed that it should dispense entirely with the acquisition of additional military power and instead direct resources to economic development. As well as imposing costs, the current period of stringency provides India with opportunities to achieve greater efficiencies and chart new directions in terms of force structure and capability. This article examines recent Indian defense spending in order to ascertain how the Indian government is approaching the problem of modernization in the context of difficult economic circumstances and tight budgets. By doing so we can expect to gain useful insights into attitudes among the governing elites toward any future role for the military in India's emergence as an Asia-Pacific power, once the current period of economic difficulty has passed.