There can be no doubt that an expenditure of 3 per cent of GDP would be quite affordable, as indeed it was in the past when it provided credible deterrence against any aggression. It is easy to argue that India’s expanding economic and strategic interests would require such an investment for the coming decades especially since the existing shortfalls and backlogs also must be catered for. We are living in a difficult world full of uncertainties; and a range of capabilities are needed for the future. For example, our increasing energy import dependency and consequent vulnerabilities due to political uncertainties and potential instability in the oil producing region of West and Central Asia, the internal war in Baluchistan, etc. may require military capabilities to protect our interests well outside our borders. The Lebanon War last summer required the evacuation of a couple of thousands Indians from the war zone, a task admirably performed by the Indian Navy. A lesser crisis in Arab states of the Persian Gulf where over 4 million live and work could pose unprecedented challenges.

No country can afford both a high-cost large-size military manpower and a high-technology (inevitably also high cost) military system. And our military manpower costs have been rising at over 11 per cent annually. Defence pensions consume fiscal resources equal to around 16-17 per cent of the defence budget. A highly professional military force like ours inevitably seeks high-technology capabilities. This has become an even greater imperative in view of both our key neighbours, China and Pakistan, investing heavily in military modernisation with state of the art technology. It is not surprising that China cut back 200,000 troops last year from its army to modernise the air force, navy and the missile forces even with an average 12 per cent growth in defence spending in real terms over the past 15 years.

... contd.