Pakistan-India Defense Spending - A Comparison

Published in Hilal English

Written By: Dr. Muhammad Mujeeb Afzal

In 2016, the world spent U.S. $1686 billion that was around 2.3 per cent of global gross domestic product (GDP). India plans to spend $ 55.7 billion in 2017 which is 2.25 percent of its GDP; in comparison Pakistan’s defense budget is $9 billion which is 3.4 percent of its total economy. Thus, Pakistan trails far behind India in defense spending; its financial provision is almost 7 times short of India’s defense resources. It has to defend its autonomy and meaningfulness in the South Asian state system within these limited resources. This is an attempt to understand the need and importance of defense spending for a nation-state, examine a comparative analysis of India and Pakistan’s patterns of defense spending and its impact on Pakistan.

 

According to Global Index of Defense Budgets, India has surpassed Germany at eighth position in highest military expenditure. It spends more on national defense compared to Brazil, South Korea, Italy and Canada. Pakistan on the other hand is on the 27 number of the same index; accordingly, it is expected that by 2020 India will rank third in world defense expenditure of 70 billion dollars after USA and China.

The debate on the defense spending generally focuses on the notion of guns versus butter model that demonstrates a relationship between a nation's investment in defense and civilian goods. It is argued that the basic responsibility of a state is to protect itself and its citizens from outside aggression. Any failure on this count will stun the growth of all the sectors of a state and its society. It might lead to disorder in the society and result in the ultimate collapse or possible annihilation of the state. Keeping this perspective in view, a number of studies both qualitative and quantitative have been done to demonstrate the linkage between the defense spending and the increase in economic growth of a nation-state. The best example is the European Union that started with the Marshall Plan, taking roots after the establishment of the security structure in the form of North Atlantic Treaty Organization (NATO).


pakindiadefspend.jpgThe opponents of this perspective argue that defense spending is a process of diversion of resources from productive economic sector to unproductive defense sector. They perceive the defense spending as a burden on the national economy that distorts the growth of all sectors of a nation-state. The studies done in this perspective have focused on the linkage between defense spending and the increase in the ratio of poverty in a country especially in the Least Developed Countries (LDC). Interestingly, most of the developed states spend huge proportion of their resources on the modernization of equipment and training of their forces. These developed states benefit immensely from the returns of their dominant strategic relationship with other states, trading in defense-related equipment and technology and using their defense-related knowledge and technical know-how in the civilian areas. Essentially, it is difficult for any state to differentiate between two fundamental objectives of its existence that is to ensure the national security and welfare of its citizens. No subordinate state can provide its citizens protection and prosperity against direct or indirect intervention or aggression of the other dominant state.

 

Thus, gun and butter are inseparable interests of a meaningfully autonomous nation-state; they pursue at the same time the twin objectives of security and prosperity. For an autonomous state, allocation of an adequate amount of funds for defense is a compulsory and competitive phenomenon that is conducted through the interpretation of the balance of threat and geo-strategic location in which it is placed. It is a perpetual, rational and integrated phenomenon of adjustment-readjustment of resource spending priorities to maintain mutually beneficial balance. That is why; defense spending is an ever-changing and complex behavior of a nation-state. It continuously swings focus between security and economic priorities.


In the South Asian state system, two factors determine defense spending of a state. Firstly, the relatively dominant position of India as compared to the rest of the regional states in terms of almost all the elements of power – geography, population and economy. This position of India gives it an illusion of grandeur and power and encourages it to struggle for the establishment of a hegemonic relationship with the smaller states of the region. Secondly, Pakistan with its middle power stature desires to remain autonomous and seek solution of the Kashmir issue through revision of the South Asian state systems borders. A unique asymmetrical strategic position exists in the region in which Pakistan cannot allow India to treat it like other small states of the region because this will turn it into an insignificant colony of Indian cheap goods. This meaningless position has never been acceptable to its people. Therefore, Pakistan is pushed to resist Indian attempts to establish its hegemony and defend its autonomy to remain meaningful to itself, regional and international powers’ structure.

 

India considered it essential to modernize its armed forces through establishment of defense industry and transfer of technology. Its 362 million people – almost 29.5 percent of its population – live in abject poverty. Ignoring them totally, it has spent huge amount of its finances to accumulate weapons systems and develop defense-related industry.

 On the other hand, India faces no serious threat, both regional and international, to its security and way of life. Its struggle is for a status and role at the international level by its domination of the South Asian region. It wishes to attain power to extend or deny security and prosperity to the regional states. The hegemonic policy is projected as a defense against the threat mainly from China and secondly from Pakistan though relatively not very significant. India considered it essential to modernize its armed forces through establishment of defense industry and transfer of technology. Its 362 million people – almost 29.5 percent of its population – live in abject poverty. Ignoring them totally, it has spent huge amount of its finances to accumulate weapons’ systems and develop defense-related industry.

 

In 2003 and 2004, the Indian defense budget was around 14 billion dollars, 2.3 percent of its GDP; since then it has increased by 7 to 9 percent every year and has reached 55.7 billion. Russia has been the main beneficiary of this defense spending. It has filled almost 70 percent of weapons and technology needs of India to make its aggressive doctrine – Cold Start Doctrine (CSD) – a reality. In return, Russia has received huge amounts of payment; for instance, it received 9.355 billion dollars in the period 2001-05. India accounted for 14 percent of global arms imports from 2011-2015, a 90 percent increase over the previous five years. Due to this Indian arms manufacturers are among the top 100 companies worldwide, with billions of earnings. Now United States has also jumped into the business; in 2014-15, it sold over 1.4 billion dollars worth of weapons to India.


The obsessive power accumulation on the part of India to achieve regional hegemony has very serious consequences for the autonomous existence of Pakistan. It has faced three wars with India; in one conflict in 1971, its eastern part was separated from Pakistan and established as a separate state, Bangladesh. The Indian intervention through the instrument of Mukti Bahini converted a normal protest movement, after a decade long autocratic rule, for political rights into a violent secessionist movement; later India invaded East Pakistan to complete its hegemonic designs. It was part of Indian covert warfare against Pakistan that resurfaced in 1980s in Sindh, and now in Karachi and Balochistan. It also supports sectarian terrorism to weaken Pakistan. Thus Pakistan has been forced to invest relatively more of its national resources into defense.

 

India accounted for 14 percent of global arms imports from 2011-2015, a 90 percent increase over the previous five years. Due to this Indian arms manufacturers are among the top 100 companies worldwide, with billions of earnings. Now United States has also jumped into the business; in 2014-15, it sold over 1.4 billion dollars’ worth of weapons to India.

The Pakistani leadership realized that it had to match its capabilities against the sophisticated weaponry of its adversary; that is why it demonstrated no hesitation in investing in the defense of the country. But two factors weighed in the minds of the decision-makers: firstly, that they cannot match many times bigger economy of India; and secondly, no plan should undermine the economic health of Pakistan. Therefore, at times of high defense spending like the conflict with India and the Afghan crisis, the rate of growth was high, like in the late 50s and 60s, it was more than 8 percent. Additionally, the defense spending, despite extreme situations, remained far less than the 45 percent for loan repayment. The decade of 90s was the most difficult period for Pakistan. Due to unstable domestic political situation, foreign aid had been discontinued and sanctions were imposed on Pakistan because it had conducted nuclear tests. The defense spending till 1999 was around an average of 6.4 percent of the GDP but after that it started to decline further to provide more space to other sectors of the economy. In 2000, it was 5.1 percent of the GDP; it was to the tune of $2,842 million back to the level of 1990. It was a decrease of 22.48 percent. The year 2000 was a period of major transformation of the economy. Pakistan privatized state-subsidized utilities companies such as banks and Pakistan Telecommunication Corporation. Additionally, reforms were also introduced in trade and tariff, higher education, money laundering, intellectual property piracy, and agricultural and industrial sectors.

 

In order to support the economy the defense spending was further brought down to 4.1 percent; in 2007-8, the defense spending was frozen. By the end of the decade, Pakistan’s economy started to show signs of improvement. The defense spending was around 3.1 percent of the GDP; in terms of dollars, it was $ 7,641 million. But these figures are in sharp contrast to Indian GDP of two trillion dollars with the defense spending of 55.7 billion dollars, a fact that can never be lost to Pakistani decision-makers and people.

 

In conclusion, it is argued that the growing sharp imbalance between India and Pakistan could have very serious consequences both for Pakistan’s meaningful autonomous survival and strategic harmony and prosperity of the South Asian region. Pakistan cannot ignore its security and welfare of its people. It will face extreme difficulties if its economy does not grow and increase the amount that is needed to defend itself.

Pakistan has always tried to reduce the burden of defense expenditure on the economy while improving the quality of its men and material for a credible security apparatus. In this regard, Pakistan has followed two policies. One, it has attempted to build alliances with the developed states to have access to sophisticated technology and capital. The pursuit of such a policy brought it closer to the United States and China. Two, Pakistan has developed indigenous defense industry to reduce its dependence on foreign sources and to contribute its share in the domestic economy. Pakistan joined the U.S.-sponsored defense pacts in the 50s. In return, it received help to develop both its armed forces and its domestic economy. The growth of import substitute industries in the 60s was the result of this policy. In 1965, Pakistan was able to effectively defend itself against the aggression of many times more powerful India. Similarly, the U.S. assistance during the Afghan Jihad and war against terror improved the capabilities of Pakistan and helped it to sustain the economic losses.

 

At the same time, the alliance with the U.S. created a dependency on the U.S. and entangled Pakistan first in the international conflicts of the Cold War and later in the war against terror. At the domestic level, it created social divisions that hindered the process of integration of various sections of the society in the post-independence nation-building process. At the time of independence, Pakistan had practically no defense industry that could fulfill its basic defense needs. India refused to give it its due share in defense equipment; after a lot of reluctance it merely gave six crore rupees as compensation. In 1951, Pakistan Ordnance Factory (POF) was established to initiate the process of indigenous production of equipment. In 1971, the Heavy Industries Taxila (HIT) was set up to fulfill the requirements of the Army to rebuild, upgrade, and manufacture tanks, tank guns and armored personnel carriers. In order to fulfill the requirements of the Air Force, the Pakistan Aeronautical Complex was built at Kamra in 1972, the Heavy Forge Foundry in 1978, and the Heavy Rebuild Factory in 1979. Pakistan’s defense industry provided equipment worth 6.3 billion dollars in 2009 and 10.4 billion dollars in 2015 to armed forces to fulfill its requirements through domestic infrastructure. In 2016, the local defense industry saved foreign exchange worth 1.5 billion dollars. During four years, 2012 to 2015, the defense industry also exported its products worth over 100 million dollars to more than forty countries; and in just one year, 2016, the exports reached 63 million dollars. Though it is a commendable achievement but still it is far behind the Indian exports of 330 million dollars in 2016 and its defense minister Manohar Parrikar has set the export target of 2 billion dollars by 2019 as part of Prime Minister Narendra Modi’s “Make in India” scheme.


The comparison of India-Pakistan defense spending is a reflection of relative power differentiation between the two countries. The Indian economy is 8 times the size of Pakistani economy and is growing by over 7 percent as compared to 4 percent of Pakistan. In economic terms India virtually adds one whole of Pakistan’s total economic turnover to its economy every year. According to Global Index of Defense Budgets, India has surpassed Germany at eighth position in highest military expenditure. It spends more on national defense compared to Brazil, South Korea, Italy and Canada. Pakistan on the other hand is on the 27th number of the same index; accordingly, it is expected that by 2020 India will rank third in world defense expenditure of 70 billion dollars after USA and China. This rising Indian power is continually increasing Pakistan’s historic sense of vulnerability. Pakistan’s situation becomes more complicated when it is facing a domestic challenge of terrorism that is getting covert support from India through unsettled Afghanistan. Its present allocation that is around 18 percent of its budgetary expenditure is not quite adequate. It badly needs to expand its economy to broaden the national cake so that within the present percentage the required volume of resources are multiplied. Additionally, it is also required to increase its technological level to balance the Indian edge.

 

In this regard, it may not have the support of USA that is developing closer strategic relations with India against China. China has a 53 billion dollars trade surplus with India. Furthermore, India is the largest importer of arms in the world, from 2011 to 2015 its arms import accounted for 14 percent of the global arms imports. Almost every country wants to have a share of this trade. This purchasing power has provided India a new sense of power and influence in the region and beyond. It likes to dictate terms of state-to-state interaction in the South Asian State system whose limited effect Pakistan has faced in the shape of eight F-16 sale deal with USA or in case of JF-17 sale deal to Sri Lanka. In future with increased strategic and economic imbalance it can attempt to block Pakistani access to high-end technologies.


Pakistan for long thought that conventional strategic imbalance can reasonably be corrected with the development of a nuclear deterrence. It has developed a relatively effective nuclear deterrence against India. Nuclear weapons are political instrument and cannot be used rationally in war situation because after a nuclear war there will be no difference between the victor and the vanquished. Thus, nuclear deterrence is used as a psychological phenomenon to achieve strategic-political objective. It is a delicate deterrence which requires constant upkeeping in order to yield positive results; if any action undermines the nature of deterrence, its effectiveness is undermined. The new weapon system that Indian Defense Research and Development Organization (DRDO) is developing can have negative impact on the nuclear deterrence between India and Pakistan. It is developing K-4 (SLBM). K-4 is a nuclear capable intermediate-range 3500 km submarine-launched ballistic missile that will nuclearize the Indian-ocean with Indian Arihant-class submarines and give India second strike capability. Secondly, India is developing indigenous ballistic missile defense (BMD) system. It has tested Ashwin missile that is an advanced air defense (AAD) anti-ballistic missile designed to intercept incoming ballistic missiles in the endo-atmosphere at an altitude of 30 km. Though, anti-nuclear defense systems are very expensive to develop and to give an illusion of defense against a nuclear attack, there is no deference whether a nuclear weapon explodes at ground or in air. These developments have a theoretical possibility to undermine the deterrence value of the nuclear deterrence. These proactive and aggressive Indian strategic plans can in future lower the nuclear threshold level and force Pakistan to enter into regional arms’ race.


In conclusion, it is argued that the growing sharp imbalance between India and Pakistan could have very serious consequences both for Pakistan’s meaningful autonomous survival and strategic harmony and prosperity of the South Asian region. Pakistan cannot ignore its security and welfare of its people. It will face extreme difficulties if its economy does not grow and increase the amount that is needed to defend itself. India as the larger state in the region has the key to restore strategic harmony and utilize the potential of the region in new economic world to end poverty and bring prosperity to the people. It will never be able to subjugate the region because of its people and competing foreign powers; even the USA will not allow it to pursue regional hegemony thoughtlessly which will push India to a disastrous arms race and outside great powers intervention. For a peaceful South Asia, it needs to resolve its long-standing conflicting issues and stop its interference in the domestic affairs of the regional states.

 

The writer is on the faculty of Quaid-i-Azam University (School of Politics and International Relations)

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