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India: Budgeting for a strategic edge and soft-power budget

By Irfan Shahzad

The budget is not merely a statement of income and expenditure of any government. It is a document indicating the direction in which a government is trying to steer the country, and the way it wishes to position the country at regional and global levels. It comes as no surprise that Modi regime in India has presented a Union budget that aims at strategic positioning and enhancing soft-power.

India’s union budget for fiscal year 2017-18 starting on April 1 was announced on February 1, and and is expected to be passed by the parliament soon. The main point highlighted by Pakistani media, and capturing the attention of many in Pakistan, understandably as always, was the hike in defence budget. As Indians are fond of explaining the amounts in lakhs and crores, the total size of the defence budget at Indian Rupees (INR) 2,74,114 crores (two lakhs, seventy-four thousands, one hundred and fourteen crore, i.e., 2.74 trillion) – more than 10 percent higher than 2.49 trillion of the outgoing fiscal –was sure to raise eyebrows in Pakistan. Yes, it is mammoth, five times the size of Pakistan’s defence spending and at around $ 40 billion, it is almost equivalent to Pakistani federal budget’s total outlay for fiscal year 2016-17.

But apart from this much talked-about volume of India’s defence expenditure, there are quite a few other aspects too which are of utmost strategic significance for Pakistan, to note.

The first are India’s grants for regional countries. All the members of SAARC except Pakistan are getting sizeable Indian money. The most notable is the amount allocated for Afghanistan, INR 350 crore ($ 52 million), which is 11% higher than 315 crore of the outgoing financial year. Bangladesh gets 125 crore, against 75 crore given for 2016-17. Allocation for Maldives is 245 crore (75 crore as grant and 170 crore as loan), against 80 crore of the ongoing year. Grant for Nepal has been increased from 320 crore to 375 crore; and some 11 crore are provided separately for Nepal’s Police Academy. Bhutan stands out, getting Rs. 3714 crore (including 1630 crore as loan) almost a continuation of the closing year’s 3867 crore.  It is not hard to understand why these countries are seen as toeing the Indian line vis-à-vis regional policies, and especially at SAARC.  Allocation for grants to Sri Lanka has decreased somewhat – from 155 to 125 crore – but remains there. Myanmar, which is not a SAARC member, is allocated 225 crore as against 120 crore of the passing year.

Chabahar port in Iran gets a grant of 150 crore ($22 million), 50% more than 100 crore granted in 2016-17 (while no budgetary provision was there at the start of this outgoing fiscal, in terms of grant for the port.)  In the outgoing fiscal year small island states of Mauritius and Seychelles were doled out grants of 410 and 50 crore (460 crore put together) respectively from the Indian exchequer, while the amount for coming financial year is 350 and 300 (650 crore, combined). This very much explains India’s designs for the ‘Indian’ Ocean region (not to forget the naval modernization plans.)

Beyond the near neighborhood, the allocations for African countries are now increased to 330 crore from 290 crores of last year, an almost 14% increase, depicting the ambitions and, again, the designs for wider ‘Indian’ Ocean region.

Another point to note is India’s contribution for some important international organizations, such as IAEA. 26 crore were allocated for IAEA for the outgoing fiscal initially, while the revised estimates indicate that actual expenditure in this head may be double of the amount, to the tune of 50 crore. For 2017-18, another 44 crore have been set aside for the purpose. This is happening at a time when India is striving to establish an image as a responsible nuclear power, while trying to secure a permanent membership of the Nuclear Suppliers Group (NSG). Increased allocations mean increased influence, and outreach. Overall, India ‘Atomic Energy’ program gets 12461 crore, almost $ 2 billion. Such is the significance of Atomic Energy for Indian policy makers that it gets as much money as the Power ministry.

It may be pointed out here that within the defence budget itself, Defence Research and Development Organization (DDRO) gets 7552 crore (US $ 1.12 billion), which means that the research and development function of the Indian defence budget alone is some 7th part of Pakistan’s whole defence allocation.

Space program, with strategic significance and indicative of India long-term ambitions, not to forget its implications for arms race in the outer respace, gets special attention of the Modi regime with 9094 crore allocated for 2017-18 against 7509 crore budgeted for the ending fiscal, which is a whopping 21% increase.

Modi regime’s now open designs for stopping Pakistan’s rightful share of water granted under IWT are explained better by a staggering 45% increase in the allocation – from 4755 to 6887 crore – for  Ministry of Water Resources, River Development and Ganga Rejuvenation.

Universities and institutions of higher learning play an important role in enhancing soft power of a nation. No surprise that New Delhi has increased the allocation for South Asian University substantially more than three times over the outgoing year, from 79 crore to 260 crore. The project for Nalanda University – a proclaimed center of academic excellence thriving from the end of first to early second millennium – pockets 200 crore, double of 100 crore spent in the year coming to a close, with the main objective to attract Buddhist students from across Asia. Singapore’s former foreign minister has been appointed as the chancellor of this major soft-power initiative.

As far as the soft-power is concerned, it would be useful to state that the Ministry of Ayurveda, Yoga and Naturopathy, Sidha and Homeopathy (AYUSH) – created by Modi’s government after taking power in 2014 – also gets 1428 crore from the government, with one of the functions being ‘yoga diplomacy.’

These aspects of the Indian budget warrant attention of the opinion leaders and policy makers, and demand a deeper understanding of the dynamics involved and dimensions covered. That is how we can formulate a proper policy response, where so is needed and especially where our interests are threatened.

*The author works with the Institute of Policy Studies (IPS), Islamabad and can be reached at


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