By: Shane Mason
The most eye-catching aspects of the recently released Indian defense budget are top-line growth and diminished spending for procurement. Top-line defense spending grew by 12 percent in fiscal year 2017 compared to the previous budget, making India one of the fastest-growing major defense markets in the world. However, the vast majority of that growth was generated by an increase in personnel costs, and an even bigger increase in pensions. Procurement spending actually declined. This trend of rising personnel costs and shrinking capital funds will decelerate India’s military modernization efforts.
India’s defense budget in fiscal year 2017 topped $50.9 billion, which means the country now has the fourth-largest defense budget in the world behind the United States, China, and the United Kingdom. The long-term growth in Indian military spending has been remarkable. India had the 13th-largest defense budget in 1995, with spending on par with Spain and the Netherlands. Now India could eclipse British defense spending in a few years, joining the United States and China as the world’s biggest military spenders for the foreseeable future.
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