Defense Spending in South Asia: Strategic Competition and Public Policy Trade-offs

Introduction

The nature of the political economy of South Asia has always been characterized by defense spending. As nuclear powers, India and Pakistan always spend large amounts of their national budgets on military spending. Such prioritization represents long-term strategic competition and, at the same time, poses urgent questions regarding trade-offs in public policy.

The ancient guns and butter argument between governments focusing on military security (guns) and social welfare (butter) is especially relevant in South Asia, where poverty levels, illiteracy, and underdevelopment continue to be pervasive. It is not only a fiscal dilemma but also a political one. Both India and Pakistan leaders defend their defense expenditures as existential needs based on the perception of historical confrontation, border issues, and terrorism.

However, the opportunity costs are very clear: the millions are left without healthcare, education, and infrastructure. This article examines the politics of defense expenditure in South Asia and how it fits in the general theme of strategic competition, economic constraints, and governance values.

Strategic Competition in South Asia

The Indian and Pakistani strategic competition, coupled with the increasing influence of China, contributes to the rising defense spending levels in the region. India has the 5th-largest military expenditure in the world, with a defense budget of INR 6.21 trillion (about 74.30 billion US dollars) in 2024-2025. A fragile economy like Pakistan still allocated Rs 2,122 billion from its FY2024-25 budget, which represents more than 11% of its total.

The next major contributing factor to the arms race in the region is that China continues to modernize its military, with its spending reaching more than 314 billion in 2024. The relationship between India and the United States, Japan, and Australia through the Quadrilateral Security Dialogue (QUAD) demonstrates how India is trying to counter the emergence of China. Pakistan, in its turn, wants to be closer to China, and by doing so, a triangular nature of relationships is formed, which only perpetuates militarization.

The conflict in Kashmir is a hot spot. In 2019, the situation has deteriorated since the abrogation of Article 370, and both India and Pakistan have stepped up military preparedness. The use of sophisticated weapons and skirmishes along the Line of Control (LoC) highlights the persistence of volatility.  Strategic competition in South Asia makes defense spending a political imperative and creates the “guns” side in the guns versus butter dilemma.

The Guns Versus Butter Debate

The debate on guns versus butter highlights the opportunity costs of having military spending as a priority over social welfare. The situation has been especially critical in Pakistan, where even as defense budgets are taking up almost 1.9 percent of the GDP, education is getting less than 1 percent, and this has left millions of citizens without access to quality education. The same trade-offs are experienced in India, whereby healthcare and poverty alleviation developments in the rural areas receive minimal funding against modernization initiatives in the defense expenditure.

This tension is well described in the metaphor. Guns imply military security, and butter is the symbol of social good, which is needed to develop human beings. Analysts claim that military expenditure is too high and it limits economic growth because funds channeled towards defense are less than the investments made in infrastructure, literacy, and healthcare. To illustrate, the levels of literacy in Pakistan are at a standstill at approximately 60 percent, and India is grappling with malnutrition that is afflicting close to 35 percent of children under five years.

These clues bring out the way that the prioritization of guns erodes butter. The COVID-19 pandemic also revealed systemic weaknesses, with the lack of investments in health systems making them unable to withstand it, and defense budgets mostly unchanged. South Asian governments give primacy to short-term security needs at the expense of long-term socio-economic stability, as evidenced by continuous defense expenditure.

Public Policy Trade-offs

South Asian defense expenditures are associated with critical trade-offs in public policy between human development and national security. Policymakers in South Asia defend defense spending because it is important to deter, but such spending decreases fiscal space for social investments. Purchases of advanced fighter jets and aircraft carriers, as well as missile defense systems in India, are taking the money that is required to meet the immediate needs of rural healthcare as well as digital literacy.

These trade-offs are increased by the dependence of Pakistan on foreign debt, which makes allocations towards defense more than development, weakening the resilience of institutions. In addition, the political economy of defense expenditure indicates entrenched interests. The military facilities in the two nations are very influential and dictate the budget priorities. In India, military modernization is often discussed within the context of nationalism as a symbol of world power. South Asian policy on the issue of development is stuck in a rut where defense interests take precedence over developmental needs, continuing to perpetuate structural disparities.

Economic Consequences of Defense Spending

The impact of defense spending in South Asia is witnessed in the form of low economic growth and fiscal imbalances, as well as poor investment in human capital. The high military expenditure is a cause of fiscal imbalances as Pakistan experiences continuous budget deficits and India struggles with an increasing debt-to-GDP ratio. The opportunity costs are also obvious: the funds spent on defense might be spent on infrastructure, education, and healthcare, so that this sustainable growth could be promoted.

As an example, the defense expenditure of Pakistan in 2024 was higher than its expenditure on health and education. Even with such a strong economy, India is still afflicted with extreme inequalities, and the rural people do not have access to clean water and sanitation. Comparative analysis demonstrates that nations that spend more in social areas will attain more long-term stability compared to nations whose spending emphasizes military spending.

The case of South Korea transitioning from being a state that values its security to a state that values development demonstrates that priorities can be used to create sustainable growth. South Asia has been faced with huge economic burdens in defense expenditures, thereby restricting the capability of the region to realize inclusive and sustainable development.

Strategic Stability and Security Imperatives

The policymakers justify defense spending in South Asia despite its economic costs as necessary to achieve strategic stability. The nuclear competition between India and Pakistan requires continuous investment in both conventional and nuclear forces to deter. The new technologies, including cyber warfare, artificial intelligence, and missile defense systems, also push the states to invest in military modernization. Border conflicts, insurgencies, and terrorism, among other regional unrests, further propagate the notion that defense expenditure is essential to survival.

In the case of India, engaging in countering Chinese aggressiveness in the Indo-Pacific would need massive naval funding. Pakistan, on the other hand, looks at its military as a guarantor of sovereignty against the perceived Indian aggression. These demands make defense expenditure a political taboo. Strategic stability issues are generic, so that defense expenditure is a political priority even at the expense of socio-economic development.

Policy Alternatives and Recommendations

The necessity to balance the defense expenditure and social development means the development of new policy options and regional collaboration. Measures of confidence between India and Pakistan would lead to less and less spending of funds on the military. Diverting some of the defense budgets to education and healthcare would improve human security to supplement military security. The regional organizations, including SAARC, might be used to negotiate arms race reduction and encourage joint developmental projects.

International organizations, such as the United Nations and World Bank, can help the South Asian states to shift priorities, as they can be linked to investment in the social sector. The civil society is also significant. Lobbying on education, health care, and gender equality can put pressure on governments to re-examine their budgetary allocations. Besides, excessive militarization can be curtailed by transparency in defense expenditure, which can be achieved by parliamentary checks and balances, as well as citizen responsibilities. Policy options that focus more on human development and strategic stability provide an avenue through which the guns versus butter dilemma in South Asia has been reconciled.

Conclusion

The defense spending by South Asia best exemplifies the conflict between strategic competition and trade-offs in public policy. The guns versus butter debate brings out the opportunity costs of spending on military expenditure at the expense of social welfare. Although strategic intentions support defense investments, the economic and social impact is immense, limiting growth and sustaining inequality.

The future stability and prosperity of South Asia still depend on a balanced approach, a kind of approach that will combine security with development. In the absence of such recalibration, the region would likely continue to embark on the militarization and underdevelopment cycles and fail to realize its sustainable growth and human security.

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