The increased allocation for defence in Chinese budget has a message for India

While India’s defence budget for financial year 2008-09 has been hiked by only five per cent in inflation-adjusted real terms to Rs 1,05,000 crore ($26.4 billion), the People’s Liberation Army (PLA) of China has been given a 17.6 per cent ($8.23 billion) increase in planned defence expenditure to Yuan 417.77 billion ($58.79 billion). Though China’s official defence expenditure (ODE) is now about 1.5 per cent of its GDP, China’s GDP has been growing consistently at over 10 per cent per annum. Consequently, given its low inflation base and a strong Yuan, China’s defence expenditure has grown at between 12 and 15 per cent annually in real terms over the last decade.
It was announced at the Fifth Session of the 10th National People’s Congress that China’s defence budget for 2007-08 would be Yuan 350.92 billion ($45 billion), an increase of 17.8 per cent ($6.8 billion) over the previous year. China claimed the rather steep hike was “caused by the sharp increase in the wages, living expenses and pensions of 2.3 million People’s Liberation Army officers, civilian personnel, soldiers and army retirees.” 
Modernisation
Defence analysts looked at the spectacular anti-satellite test successfully conducted by China in January 2007, pictures of the aircraft carrier under construction, the acquisition of SU-30 fighter-bombers and air-to-air refuelling capability, the drive towards acquiring re-entry vehicle technology to equip China’s Inter Continental Ballistic Missiles (ICBM) with Multiple Independently Targetable Reentry Vehicles (MIRV), a growing footprint in the South China Sea and could not help wondering whether a 21st century arms race had well and truly begun. Analysts wondered whether China was modernising the PLA mainly in keeping with its objective of enhancing its “comprehensive national strength” or if the Chinese had other designs.
China’s military aims and modernisation strategy have been enunciated in the Defence White Paper of December 2006. It states that the strategy is “... a three-step development strategy in modernising China’s national defence and armed forces, in accordance with the state’s overall plan to realise modernisation. The first step is to lay a solid foundation by 2010, the second is to make major progress around 2020, and the third is to basically reach the strategic goal of building informationised armed forces and being capable of winning informationised wars by the mid-21st century.”
India’s defence budget is less than half of China’s officially claimed figure. However, India’s expenditure on pay and allowances and maintenance, comparatively, is much greater than that of China. Hence, China is able to spend far more on modernisation and the acquisition of new military hardware and equipment than India. 
Due to China’s vigorous military modernisation drive, the military gap between India and China is growing every year. India needs to invest more in improving the decrepit logistics infrastructure along the border with Tibet, in hi-tech intelligence, surveillance and reconnaissance (ISR) systems for early warning and in generating land- and air-based firepower asymmetries to counter China’s numerical superiority. 
Indian context
India also needs to raise and suitably equip mountain strike divisions to carry the fight into Chinese territory if it ever becomes necessary. All of these capabilities will require a large infusion of fresh capital. India’s growing economy can easily sustain a 0.5 to 1.0 per cent hike in the defence budget over a period of three to five years, especially if the government shows the courage to reduce wasteful subsidies.
China’s overall aim is to close the wide military gap between the PLA and the world’s leading military powers, particularly in hardware designed to provide strategic outreach capabilities. 
Consequently, India must enhance its investment in modernising its armed forces so that they are not found wanting in case of another conflict in the Himalayas in future, both in terms of the adequacy of force levels for carrying the conflict into Tibet and the military hardware (firepower, crew-served weapons and C4ISR), that is necessary to fight at altitudes above 11,000 feet on the Tibetan Plateau.
(The writer is director, Centre for Land Warfare Studies, New Delhi)