Slashing the Defense Budget | Biggest Mistake of Modi Government

Описание: रक्षा बजट में कटौती | मोदी सरकार की सबसे बड़ी गलती

EPISODE 220 | WHAT DOES THIS DATA SAY


GDP Share Concerns:

Defence spending as a percentage of GDP has hovered around 1.9–2%, down from 2.41% in 2015–16. Experts, including the Parliamentary Standing Committee, recommend at least 2.5–3% of GDP to meet modernisation and deterrence needs.

The issues are many -

Insufficient Modernisation: The modest growth in capital expenditure (e.g., 4.6% in 2025–26) is inadequate for acquiring advanced systems, such as drones, fighter jets, and air defence systems, needed to counter China’s military buildup and Pakistan’s capabilities. Analysts argue India needs a sustained double-digit increase in defence spending for a decade to close the gap.

Low GDP Share: At 1.9–2% of GDP, India’s defence spending is lower than China’s (estimated at 1.3–1.5% of a much larger GDP) and below the 2.5–3% recommended by experts. This has led to perceptions of underfunding, especially amid tensions along the Line of Actual Control (LAC) with China since 2020.

Pension Burden: The high share of revenue expenditure (70–72% of the budget) for salaries and pensions crowds out funds for modernisation. The One Rank One Pension (OROP) scheme, implemented in 2014 and revised in 2024, has increased this burden.

Procurement Delays: Bureaucratic inefficiencies and a sluggish acquisition process have delayed critical deals, leaving the armed forces underequipped for a potential two-front war.

Hindsight Analysis

In hindsight, the Modi government’s defence budget strategy has had mixed outcomes:

Shortfalls: The failure to increase defence spending to 2.5–3% of GDP and the slow pace of procurement have left gaps in modernisation, particularly in critical areas such as air defence and fighter jets. The 2020 Galwan clash with China exposed vulnerabilities, and the budget’s focus on revenue expenditure has limited India’s ability to rapidly scale up capabilities.
Achievements: The push for self-reliance has strengthened India’s defence industrial base, with companies like Hindustan Aeronautics Limited and Bharat Electronics Limited seeing significant growth. Strategic deals (e.g., Rafale, S-400) and border infrastructure investments have bolstered deterrence, though not at the desired pace.

Conclusion
While India’s defence budget has not been reduced in absolute terms, its growth has not kept pace with the scale of modernisation needed to address threats from China and Pakistan. The low GDP share and high revenue expenditure are valid criticisms, but economic constraints and the focus on self-reliance complicate the narrative. Calling it Modi’s "biggest mistake" is an oversimplification, as the government has made progress in indigenous production and strategic investments. However, to ensure long-term security, India needs to streamline procurement, increase capital expenditure, and aim for 2.5–3% of GDP in defence spending, as recommended by experts.

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