STRATEGIC ANALYSIS

Defence Economics: Core Issues

Dr. Rajan Katoch is a member of the Indian Administrative Service, presently serving as Principal Secretary Government of Madhya Pradesh, Home Department. He has worked in the Planning Commission and the Ministry of Finance, Government of India, as well as in the World Bank, Washington D.C. A student of economics, Dr. Katoch is credited with brining out in 1995, the first-ever sub-national human development report in the world. He has authored articles and presented papers on human development, regional balance and planning, government, institutional finance, and most recently on the emerging field of defence economics.
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  • April 2006
    Volume: 
    30
    Issue: 
    2
    Articles

    Defence can seldom ignore the standard economic problem—the need to make critical often hard resource choices. Yet the output of defence studies focuses almost entirely on professional and strategic issues, and little on finance or economics. There is a presumption in most countries that the needs of defence must be met, and often they are met without
    serious political debate. Defence budgets attract limited scrutiny, even in advanced countries like the US, where the general feeling is that the bigger the budget the better.In India the defence budget has at times been approved by Parliament without a debate. Given the sheer size and scale of the defence sector and its share in the world economy and
    trade there is a need for greater knowledge of its economics, effective financial scrutiny and debate. Developing countries such as India with significant defence sectors need the analysis and insights of defence economics. Resources are scarce, the allocation problem are acute in the face of an unfinished development agenda and optimisation imperative. It holds the potential of enabling better utilisation of scarce
    resources, and getting a bigger “bang for the buck”, without
    compromising specified strategic objectives. Application of modelling and gaming theories can even assist in strategic decision-making. Insights and findings of defence economics can on the whole be expected to enhance national security.

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