China's military budget, scaling new heights every year, has increased by almost 100 per cent since 2005, touching US$58.8 billion in 2008. This is the twentieth year in a row that China has recorded double digit growth in its military budget. This year, the defence budget of China increased by 17.6 per cent over last year. While announcing the defence budget on 4 March 2008, the Chinese spokesman Jiang Enzhu informed that the increased budget would allow for upgraded equipment and improve service conditions for its 2.3 million strong armed forces.

With its economy growing at 10 per cent since 1990, China has succeeded in maintaining high military budgets in recent years, increasing it by almost 15 per cent on a yearly basis over the last five years. China's enormously high defence budget together with its relentless pursuit to build a modern and powerful military, capable of fighting high intensity war under high-tech conditions is viewed with concern by many nations, including the US and India. Unscathed by international criticism, Beijing projects a benign view of its military budget arguing that, in terms of GDP, it is still lower than other major powers like the US, Russia, UK and France.

Most Western analysts, however, do not agree with Chinese assertions, as they believe that the actual military spending by China is at least twice what is revealed in the official budgets. According to official pronouncements, China's defence budget as a percentage of its GDP is modestly placed at 1.5 per cent. The budgetary allocation for 2008 suggests that Beijing has allocated 1.7 per cent of its GDP towards defence. This claim, however, is also contested.

It is generally alleged that China's defense budget does not account for expenditure incurred on its strategic forces, foreign acquisitions, military-related research and development, and paramilitary forces. The actual defence budget for 2008 could be above US$100 billion. Clearly, with a defence budget as large as this China has emerged as the largest military spender in Asia, overtaking Japan in 2007. And, if the present trend in Chinese military expenditure is sustained through the next decade, the military budget could go well beyond US$200 billion by 2020.

While the rest of the world remains skeptical about China's imperative for building its defence capabilities that extends far beyond its strategic horizon, Beijing's ambition to transcend being a regional power to become a global power with extended influence requires it to develop multidimensional force projection capabilities. Over the past few years, the Chinese military has significantly improved its underwater and airborne combat capabilities, with the development of aerospace capabilities assuming greater significance over that of conventional forces. The modernization of Chinese war-waging machinery, which has vintage Russian equipment, requires massive spending. A large portion of China's increased military budget seeks to fund new projects incorporating state-of-the-art technology, better training facilities and improved living standards for its soldiers.

China's growing military power together with its spiraling defence budget has special significance for countries in Asia, particularly, India. The various modernization plans of the Indian armed forces, especially the ones that take into account long-term strategic perspectives, need to take note of evolving Chinese military capabilities. Russia being the major source for conventional weapons to both China and India in the past, the modernization plans of the two Asian militaries remains much the same.

With modernization being unavoidable because of the current pace of technology affecting most competing militaries, the Indian military, too, is expected to modernize its capabilities by inducting high-tech weapon systems, including jet fighters, warships, tanks, and helicopters worth US$100 billion and more, stretching into the next decade as part of its long-term modernization plans. While capital expenditure under India's defence budget, which is meant for new acquisitions, has risen steadily since 2001-02, the defence budget has not increased beyond 10 per cent on a year-to-year basis, except in 2004-05, when it was raised by 27 per cent, with capital expenditure touching an all-time high of 60 per cent. Since the corresponding figure for Chinese military expenditure under capital head is not known, it can be surmised from its average 15.8 per cent annual growth since 2003-04 that Beijing will achieve its military modernization goals much faster than India.

Since economic progress of any nation is directly linked to its defence preparedness and vice-versa, the rising economic profile of India makes it imperative that the armed forces get the money they demand to safeguard the country's long-term economic interests, especially when military technology is getting obsolete sooner rather than later. It is high time this reality is factored into India's defence budgetary planning process.