LONDON — China has declared that its official defense budget for 2011 will rise by 12.7 percent from the previous year. Last year there was a lot of hoopla surrounding the fact that China had announced a mere 7.5 percent jump in defense budget. It was the first time since the 1980s that China’s defense spending increased by a single-digit percentage. But this year we are back to the norm of double-digit increases.

While China’s civilian leadership has tried to downplay the latest increase, suggesting that much of the increase will go to human resources development, infrastructure and training, it is the response of the Chinese military that should be a matter of concern. Military spokesman Maj. Gen. Luo Yuan was unambiguous in suggesting that when it comes to military spending, there is no need for China “to care about what others may think.” The international community has long demanded that China should be more transparent about the intentions behind its rapid defense spending. Now the Chinese military is making its strategic intent clear.

Divisions within China about the future course of nation’s foreign policy are more stark than ever. It is now being suggested that much like young Japanese officers in the 1930s, young Chinese military officers are increasingly taking charge of strategy with the result that rapid military growth is shaping the nation’s broader foreign policy objectives. Civil-military relations in China are under stress with the PLA asserting its pride more forcefully than even before and demanding respect from other countries. “A country needs respect, and a military also needs respect,” wrote a major general last year in the PLA’s newspaper. Not surprisingly, China has been more aggressive in asserting its interests not only vis-a-vis India but also vis-a-vis the United States, the European Union, Japan and Southeast Asian states.

The increasing assertion by the Chinese military and changing balance of power in the nation’s civil-military relations should be a real cause of concern for China’s neighbors. The pace of Chinese military modernization has already taken the world by surprise and it is clear that the process is going much faster than many had anticipated. A growing economic power, China is now concentrating on the accretion of military might so as to secure and enhance its own strategic interests. China, which has the largest standing army in the world with more than 2.3 million members, continues to make the most dramatic improvements in its nuclear force among the five nuclear powers, and improvements in its conventional military capabilities are even more impressive.

What has been causing concern in Asia and beyond is the opacity that surrounds China’s military buildup, with an emerging consensus that Beijing’s real military spending is at least double the announced figure. The official figures of the Chinese government do not include the cost of new weapon purchases, research or other big-ticket items for China’s highly secretive military. As a result, the real figures are much higher than the revealed amount.

Despite this, India’s own defense-modernization program is faltering. This year the Indian government has allocated only 1.8 percent of its GDP to defense, though ostensibly the military expenditure has gone up by 11.58 percent. This is only the second time in over three decades that the defense-to-GDP ratio has fallen below 2 percent of GDP. This is happening at a time when India is expected to spend $112 billion on capital defense acquisitions over the next five years in what is being described as “one of the largest procurement cycles in the world.” Indian military planners are shifting their focus away from Pakistan as China takes center-stage in future strategic planning.

Over the past two decades, the military expenditure of India has been around 2.75 percent, but since India has been experiencing significantly higher rates of economic growth over the last decade compared to any other time in its history, the overall resources that it has been able to allocate to its defense needs has grown significantly. The armed forces have long been asking for an allocation of 3 percent of the nation’s GDP to defense.

This has received a broad political support in recent years. The Indian prime minister has been explicit about it, suggesting that “if our economy grows at about 8 percent per annum, it will not be difficult for [the Indian government] to allocate about 3 percent of GDP for national defense.” The Indian Parliament has also underlined the need to aim for the target of 3 percent of GDP. Yet as a percentage of GDP, annual defense spending has declined to one of its lowest levels since 1962.

But defense expenditures alone will not solve all the problems plaguing Indian defense policy. More damagingly, with the exception of this year, for the last several years now the defense ministry has been unable to spend its full budgetary allocation.

The defense-acquisition process remains mired in corruption and bureaucratic red tape. A series of defense procurement scandals since the late 1980s have also made the bureaucracy risk averse, thereby delaying the acquisition process. A large part of the money is surrendered by the defense forces every year because labyrinthine bureaucratic procedures involved in the procurement process make it impossible to spend the entire budget.

India’s indigenous defense-production industry has time and again demonstrated its inability to meet the demands of the armed forces. The Indian armed forces keep waiting for arms and equipment while the Finance Ministry is left with unspent budgets year after year. Most large procurement programs get delayed, resulting in cost escalation and technological or strategic obsolescence of the budgeted items.

The Indian government has yet to demonstrate the political will to tackle the defense-policy paralysis that seems to be rendering all claims of India’s rise as a military power increasingly hollow. The capability differential between China and India is rising at an alarming rate. An effective defense policy is not merely about deterring China. In the absence of an effective defense policy, India will lose the confidence to conduct its foreign policy unhindered from external and internal security challenges.

Harsh V. Pant teaches at King’s College in London and is the author of ‘The China Syndrome.’

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