Prime Minister Manmohan Singh has stated that war is not an option in dealing with Pakistan-supported terrorism. That considered opinion from an economist prime minister reflects a great deal more than his words convey. It is not as if India will pursue a pacifist policy. It is also not an issue of whether India can afford to fight a war. A war will need to be fought and won, if it is forced upon India. What Dr Singh’s statement reflects is a deeper understanding of the evolving nature of conflict. India will need to consider a range of options in dealing with terrorism. All options for ensuring India’s security will, however, have to be backed by the ultimate capacity to wage and win a war.

Demands from the social, technological, infrastructure sectors on national wealth will continue to grow. The pressure to maintain defence expenditure at current levels will not diminish. India can afford its present financial outlays for defence indefinitely, and even improve upon it. The important question before India’s strategic planners today is more of obtaining optimal capabilities from defence outlays and less of their affordability. India has moved beyond the traditional debates of ‘bread versus guns’, or ‘development versus defence’ which dominated economic thinking in the early decades after Independence. Its military capabilities have made India secure from a military threat to its territorial security. Public opinion has supported such efforts. What Indians will not support is diminishing military capability at rising costs.

A better understanding and management of the economics of defence is, therefore, more important than before. Defence economics permits a better approach of dealing with military needs as economic problems. This approach facilitates cost-benefit driven fund allocation and the efficient use of resources. When military needs are viewed on the basis of economic choices rather than as inflexible military demands, multiple options open up to better utilise financial outlays.

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