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After shocking the world with a series of nuclear tests and igniting a dangerous nuclear race with rival Pakistan, India's ten week old Hindu nationalist government has pulled yet another rabbit from its hat - a baffling 14 percent increase in India's defense spending for Fiscal Year (FY)1998-99. As one of the largest peacetime increases in India's defense budget, the move will have profound consequences for the country and the region as a whole. In the new Bhartiya Janata Party (BJP)-led government's first budget, Finance Minister Yaswant Sinha allocated 412 billion rupees (Rs.) ($988 million) to the Defense Ministry for FY 1998-99, a 14 percent increase over last year's spending. The Indian Army stands to benefit most from this hike, enjoying 18 percent more than last year's allocation - some 59 percent of the country's total defense budget. Spending for Indian Navy went up 17 percent in the current budget, which is about 14.5 percent of the total defense allocation. The military research and development (R&D) budget showed a considerable increase as well, receiving Rs. 1.776 billion this year compared to Rs. 1.298 billion in 1997-98. The Indian Air Force's budget of Rs. 9.369 billion, about 22 percent of the total defense spending, remained roughly the same as last year. Domestically this budget aims to initiate the process of creating a more nationalized and self sufficient economy, a promise of the BJP's election agenda. As part of its budget, the government proposed an 8% increase in tariffs to provide better protection to domestic industries. Such a move is part of New Delhi's attempts to create a "swadeshi" economy, which emphasizes protecting the domestic corporate sector from foreign competition. However, Sinha's plan to create a more self sufficient economy appears to be in serious trouble when considered against the trend of India's declining annual growth rate, which dropped to 5.0% from 7.5% last year. Experts have predicated a continuation of this decline with the drying up of foreign investment. Given the economic slowdown, how New Delhi hopes to pay for the higher defense spending is a mystery. Regionally, this budget has much more dangerous consequences. The unprecedented steep increase in Indian military spending will further fuel the arms race between India and Pakistan. This danger becomes even clearer when coupled with huge increases in spending on New Delhi's atomic energy and space programs. The FY 1998-99 budget calls for a 68% increase in the Atomic Energy Commission's allocation, while the Space Department is projected to receive a 62 percent increase. Both of these departments have played crucial roles in the country's nuclear weapons program. The Atomic Energy Commission heads India's civilian and military nuclear program, while the Space Department is responsible for India's ballistic missile developments. Even more disturbing is the aggressive posture which these increases represent. Finance Minister Sinha said that the new budget, in combination with last month's nuclear tests, comprise a "defining moment in history." In justifying higher spending, Sinha told the Indian Parliament that "there can be no compromise in our defense preparedness" and promised that he would request additional funds if necessary. This major surge in Indian defense budget and the prospect of even further
increases will undoubtable be seen in Pakistan as yet another sign of India's
military adventurism. In fact, following the Indian move, Pakistani officials
have announced that they are considering a 5% to 10% increase (in real
terms) in defense spending in their national budget which is due to be
presented on June 15, 1998. Return to Global Beat Home Page Nuclear Watch | East Asian Security | Economic & Monetary Union | NATO Expansion | Nuclear Weapons and Proliferation | U.S. Defense Policy | Publications | Events | |
