On February 28, 1963, Morarji Desai as the Finance Minister, presented the Union Budget which had a Rs 708.5 crore allocation for defence; a whopping 38% share out of a total budget of Rs 1852 crore.
This was after the Indo-China war in 1962. The realisation of the importance of defence, in economic progress of the country dawned a bit late in this case. For a nation which has been virtually at war, both overt and covert, the importance of military capability generation still is a discussion point in every Union Budget because of various other commitments and very cogent reasons, given the competing priorities, including meeting basic needs.
We argue that most large counties that have driven long term economic growth and want to play at the global stage have invested significantly in military capabilities. India needs to look at a five-year plan, that takes our defence allocation to beyond the 1.5% of GDP (ex-pensions) to 3%. NATO guidelines are for a minimum of 2% of GDP on defence, so +1% to begin with would be ideal given our geographic reality.
Other measures would have to be coupled with it to generate finances and focus shifted to acquisitions enhancing deterrence.
While we hope that the current scenario with China will get resolved sooner than later, it is pragmatic to presume that some of our neighbours will continue to present tactical and strategic challenges. Long term budget allocation to defence has to be strategic and to be analysed in different scenarios.
A reconciliation with China, fuelled by the realisation that military aggression would mean immense loss in human lives, impact on economy and unachieved objectives leading to loss of international standing.