Indian Army Expenditure

Introduction

The Indian Army is the land-based branch and the largest component of the Indian Armed Forces. Tasked with ensuring national security, defending the country from external aggression and internal threats, and maintaining peace and security within its borders, the Army plays a vital role in India's sovereignty. Given its size, strategic importance, and operational requirements, the Indian Army accounts for a significant portion of India's defense expenditure. Analyzing the Indian Army's expenditure offers insights into India's military priorities, strategic thinking, economic considerations, and geopolitical positioning.

Historical Overview of Indian Army Expenditure

Since India's independence in 1947, defense spending has been a critical focus area. The first few years post-independence saw relatively modest defense budgets. However, geopolitical tensions—such as the 1947-48 war with Pakistan, the 1962 war with China, the 1965 and 1971 wars with Pakistan—demanded a significant uptick in military investments.

In the aftermath of the 1962 Sino-Indian war, India realized the need for rapid military modernization. Defense spending steadily rose, with a focus on building a strong and self-reliant military force. Throughout the 1970s and 1980s, amid the Cold War environment, India's defense allocations remained robust, aided by defense cooperation with the Soviet Union.

Post-1991, economic liberalization somewhat constrained defense spending as India prioritized economic growth. However, events like the 1999 Kargil conflict and the continuing threats of terrorism and border tensions kept defense—and specifically Army—expenditure on a consistently upward trajectory.

Current Structure of Indian Army Expenditure

The Indian Army's expenditure can broadly be categorized into:

1. Revenue Expenditure:
   This includes salaries, pensions, maintenance of establishments, consumables like fuel and rations, and day-to-day operational costs. Revenue expenditure forms the majority (approximately 60-65%) of the Army's budget.

2. Capital Expenditure:
   Capital outlays include modernization programs, acquisition of new weapons systems, upgradation of existing platforms, infrastructure development, and research & development. Capital expenditure is critical for technological upgradation and operational preparedness.

Budget Trends

1. Annual Allocations

In the 2024-25 Union Budget, the Ministry of Defence (MoD) was allocated approximately ₹6.21 lakh crore ($75 billion), which is about 13% of the total government expenditure. Out of this, the Indian Army received around ₹1.92 lakh crore ($23 billion) for its operational and modernization needs.

2. Comparative Spending

Within the defense sector, the Indian Army typically consumes the largest share of the budget, followed by the Air Force and the Navy. However, compared to global military powers, India’s defense spending, as a percentage of GDP (~2%), is modest.

3. Pension Burden

One unique aspect influencing Army expenditure is the substantial burden of defense pensions. Veterans, widows, and families are entitled to pensions, and with programs like the "One Rank One Pension" (OROP) scheme, pension payouts have significantly risen, at times consuming almost a quarter of the total defense budget.

Factors Driving Indian Army Expenditure

Several strategic, political, and operational factors drive the Indian Army's expenditure patterns:

• Border Disputes: Continuous tensions with Pakistan (especially over Kashmir) and China (particularly along the Line of Actual Control) necessitate heavy spending on troop deployment, surveillance, infrastructure, and preparedness.

• Counterinsurgency Operations: Maintaining a strong presence in regions like Jammu & Kashmir and parts of the Northeast requires sustained operational expenditure.

• Modernization Needs: To remain combat-ready against technologically superior adversaries, the Army must continually invest in new weaponry, armor, artillery, missiles, drones, and communication systems.

• Territorial Defence Infrastructure: Building and maintaining road networks, tunnels, bridges, and outposts in border areas is essential but costly.

• Human Resources: The Indian Army is among the largest standing armies globally, with over 1.2 million active personnel and around 960,000 reserves. Salaries, allowances, and benefits for this massive workforce consume a major share of the budget.

Key Areas of Expenditure

1. Personnel Costs

Approximately 50% of the Army's budget is allocated to salaries, allowances, and pensions. The Indian Army’s strength in human numbers necessitates such high spending. Despite efforts towards a leaner and more technology-oriented force, the Army remains manpower-intensive due to its territorial defense responsibilities.

2. Equipment Modernization

Modernization programs include:

• New generation rifles (e.g., AK-203 project with Russia)

• Future Infantry Combat Vehicles (FICVs)

• Artillery modernization (e.g., Dhanush howitzers, M777 light howitzers)

• Combat drones, AI-based systems

• Missile systems like BrahMos

• Air Defense modernization (e.g., Akash SAM systems)

However, modernization has often been delayed due to bureaucratic hurdles, budget constraints, and procurement inefficiencies.

3. Infrastructure Development

With increasing focus on enhancing mobility along border regions (especially with China), significant investments are made in:

• Border roads (e.g., BRO projects)

• Airstrips in high-altitude areas

• Bridges (e.g., strategic bridges like the one over the Shyok River)

These projects not only serve military purposes but also aid in the socio-economic development of remote regions.

4. Training and Joint Exercises

Indian Army expenditure also covers regular training exercises, simulation-based training, and joint military exercises with friendly nations like the USA, Russia, France, and others under initiatives like Yudh Abhyas, Indra, and Shakti.

Challenges in Indian Army Expenditure

1. High Revenue Expenditure

The lopsided budget allocation towards salaries and pensions leaves less room for capital modernization. In contrast, other major militaries (e.g., USA, China) allocate much larger shares towards R&D and advanced technologies.

2. Procurement Delays

Procurement processes often involve complex tendering, regulatory approvals, and trials, leading to substantial delays in acquiring critical equipment. The lack of swift decision-making reduces operational efficiency.

3. Dependence on Imports

Despite efforts under "Make in India" and "Atmanirbhar Bharat" (self-reliant India) initiatives, the Army still depends heavily on foreign suppliers for critical technologies.

4. Rising Pension Liabilities

The growing pool of retired military personnel increases the pension burden annually, straining the available funds for active force requirements.

Steps Towards Reform

Recognizing these challenges, several reforms have been initiated:

• Agnipath Scheme: Introduced in 2022, the Agnipath recruitment model aims to reduce the long-term pension burden by offering short-term military service (four years) for a substantial part of the force.

• Defense Procurement Procedure (DPP) Reforms: Streamlining the defense procurement process to ensure faster and transparent acquisitions.

• Atmanirbhar Bharat in Defense: Encouraging indigenous manufacturing through Defense Public Sector Undertakings (DPSUs) and private sector participation. Major recent indigenous initiatives include the manufacture of Arjun tanks, Tejas light combat aircraft, and artillery systems like ATAGS.

• Army Design Bureau (ADB): Set up to bridge the gap between the Army’s modernization requirements and the Indian industry’s capabilities.

• Technology Focus: Increased investments in cybersecurity, space-based surveillance, artificial intelligence (AI), robotics, and quantum computing.

Future Outlook

Looking ahead, Indian Army expenditure is expected to:

• Continue rising steadily, especially given ongoing border tensions and global uncertainties.

• Shift towards greater capital expenditure, focusing on modernization and technology absorption.

• Emphasize jointness with the Navy and Air Force, particularly after the creation of the Department of Military Affairs (DMA) under the Chief of Defence Staff (CDS).

• Prioritize indigenization and public-private partnerships to achieve self-sufficiency in defense manufacturing.

Additionally, India is expected to invest heavily in emerging domains like space warfare, cyber operations, and unmanned systems, expanding the Army’s traditional scope.

Conclusion

The Indian Army’s expenditure reflects the country's strategic aspirations, security challenges, and evolving military doctrines. Managing a delicate balance between maintaining a large standing force and modernizing for future warfare is an ongoing challenge. While fiscal constraints, bureaucratic hurdles, and pension liabilities remain pressing concerns, reforms and policy initiatives show promising signs. A prudent, future-ready approach to Army expenditure will not only safeguard India’s territorial integrity but also assert its position as a major global power.