The Week That Was:

From: Vartaa Editorial Team on Aug 28, 2016

India-Pakistan parlays

PM Modi's references to Balochistan in his Independence Day speech are still causing flutters with China warning India over meddling in Pakistan's affairs. The Chinese have been staunch allies of Pakistan and this stand should not have come as a surprise to New Delhi. Meanwhile, Home Minister Rajnath Singh is all set to lead an all party delegation to Kashmir to sooth the sentiments and take stock of the situation. Jammu and Kashmir CM Mehbooba Mufti has also been doing the rounds of hospitals visiting those injured in the police firing with pellets.

Delhi's Civic troubles

Delhi's familiar troubles with the monsoon season came back to haunt it this past week with heavy rains causing waterlogging in the many parts of the city. Along with the monsoons, the menace of dengue returned as well. The number of cases in the city has now risen to above 500 in the city and the city administration has now acknowledged two cases of deaths as well.

Indian states wooing investors

Taking a leaf from PM Modi's playbook, Indian CMs are now taking steps to actively reach out to investors abroad to attract investments in their states. Madhya Pradesh CM Shivraj Chouhan is travelling to the US selling MP as an ideal destination for investments. Odisha CM Naveen Patnaik is also positioning his start as a start up hub with the state releasing a 'Start-Up 2016' policy that outlines incentives. The state plans to be one of the top 3 start-up destinations by 2020.

Opinions you must read:

  • Mint looks at the lessons to be learnt from the slowdown in China's economy.
  • The Hindu talks about the clash of symbolism taking place in Kashmir over the last two months as the state faces another round of agitation.
  • Mint asks whether financial inclusion can be achieved through a cashless mechanism.

Chart of the Week

The recent Scorpene Submarine leak brought into focus not only the increasing vulnerability of sensitive defense data to leaks but also the fact that military hardware is very pricey. The Scorpene deal amounted to $3 Billion for 6 submarines ($500 million per boat) and India strikes such deals regularly. This got us thinking, just how much does India spend on the military? How does this compare with other countries and with other major spending categories such as education and healthcare?

As you can see in the chart, India spent north of $50 Billion in 2015 on the military. This is approximately 2.4% of India's GDP. In absolute terms, military spending has more than doubled over the last 10 years. However, if you look at spending as a % of GDP, it has stayed remarkably constant compared to 10 years ago. In fact it spiked in 2009 and has slightly declined since. How does this compare to military spending around the world? In absolute terms, India has the 6th highest military budget in the world behind the US, China, Saudi Arabia, Russia, and the UK. At $215 Billion in 2015, China spends more than 4 times as much as India. As a % of GDP, India's 2.4% is slightly above the world average of 2.3%. No major nation comes even close to Saudi Arabia's 13.5% of GDP spent on military!

While military spending is 2.4% of GDP, public healthcare spending was a mere 1.4% of GDP in 2014 and public education spending was 14.1% of GDP in 2012. Spending in both these sectors is trending higher. This is a good sign. The Narendra Modi led BJP government has been in power a little over 2 years now and has put together only one national budget thus far. It will be interesting to see if this seemingly hawkish government maintains the status quo or dramatically increases military spending in the near future.