What will be the Effect of Increased Military Spending?

Increased military spending can boost national security and create jobs but may also strain public finances, reduce social welfare funding, and escalate regional tensions, affecting long-term economic and geopolitical stability.

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Context: The North Atlantic Treaty Organization (NATO) summit in June pledged to increase military spending to 5% of the member nations’ GDP (specifically “core defence requirements as well as defence and security-related spending by 2035”).

Historical Trajectory of Military Expenditures

Cold War Era (1947-1991):

Military spending peaked, reaching 1% of global GDP in 1960.
Driven by arms race between the US and USSR.
In the final Cold War year (1991), military spending was 3% of global GDP.

Post-Cold War Decline (1991–1998):

Significant reduction in global tensions led to a steady fall in spending.
Lowest point in 1998: 2.1% of global GDP, around $1,100 billion.

Gradual Increase (2000s-2010s):

Resurgence due to regional conflicts, terrorism, and new security challenges.
By 2015, it was 2.3% of global GDP.

Recent Surge (2020s):

Major conflicts (Russia-Ukraine, Israel-Gaza, India-Pakistan, Israel-Iran) triggered rapid increases.
2024: 2.5% of GDP ($2,718 billion), up 9.4% in one year—the sharpest rise since 1988.

Top 5 Military Spending Countries (2024)

United States: $997 billion, 3.4% of U.S. GDP.
China: $314 billion, about 1.7% of GDP.
Russia: $149 billion, at 7.1% of its GDP.
Germany: $88.5 billion, ~1.9% of GDP.
India: $86.1 billion, around 2.3% of GDP

Biggest Spenders as Share of GDP (excluding active war zones)

Saudi Arabia: 7.3%
Poland: 4.2%
United States: 3.4%

Effects of Increased Military Spending

Crowding Out of Social & Developmental Expenditure: Diverts resources from health, education, poverty reduction, and climate mitigation.
- UN’s annual budget ($44 billion) is dwarfed by military spending ($2.7 trillion).
Setback to UN and Global Peace Initiatives: Cuts in foreign aid (e.g., closure of USAID) weaken development, humanitarian, and peacekeeping programs.
Undermining Progress on Sustainable Development Goals (SDGs): Reduced funds slow efforts to end poverty, improve health services, and achieve universal healthcare.
- Example: USAID’s withdrawal may result in 14 million additional deaths by 2030.
Impact on Climate Change: Increased defence activity raises greenhouse gas emissions (e.g., a 3.5% NATO GDP target = 200 million extra tonnes annually).
- Funds diverted from climate mitigation, despite rising climate emergencies.
Resource Misallocation: Scarce public funds are allocated to weapons and military rather than addressing basic needs and public welfare.
- In 12 days, the U.S. spent $1 billion on missile interceptors (comparable to one-sixth of the UN’s half-year receipts).
Global Inequality: Military spending is concentrated in a few countries, exacerbating inequalities in global security and development.
Threat to Long-Term Human Well-being: Peace is not just the absence of war, but requires investment in life-sustaining conditions; increased military budgets undermine this holistic peace.

How is India Affected by Increased Military Spending?

Budgetary Trade-offs: Higher defence allocations reduce fiscal space for essential sectors like health, education, and welfare.
- Example: In 2023-24, India allocated ₹6.81 lakh crore to defence, while Ayushman Bharat health insurance received only ₹7,200 crore.
Low Public Health Spending: Despite rising defence spending (2.3% of GDP), public health spending remains low (1.84% of GDP), far below both the national target (2.5%) and developed country averages (~10%).
Strain from Emergency Expenditure: Operations like “Operation Sindoor” led to emergency allocations (₹50,000 crore), straining the overall budget further.