Defence Economics, Mobilisation and Logistics
This domain asks how resources are allocated to security and what mobilisation and logistics actually require.
Budget and procurement
Guns-versus-butter, opportunity cost and the defence multiplier are the basic tools. India's defence budget is roughly 1.9 per cent of GDP, split between revenue expenditure (salaries, pensions, maintenance) and capital expenditure (acquisition and infrastructure); pensions consume a large share and squeeze modernisation. Procurement follows the Defence Acquisition Procedure 2020, which replaced DPP 2016. Categories run from Buy (Indian-IDDM) through Buy (Indian), Buy and Make (Indian), Buy and Make, to Buy (Global). Offsets of 30 per cent apply above the prescribed threshold, and FDI is permitted up to 74 per cent automatic and 100 per cent through the government route. Industry includes DRDO, DPSUs such as HAL, BEL, BDL, MDL and GRSE, and the seven companies carved out of the Ordnance Factory Board in 2021. Exports have crossed 21,000 crore rupees in a recent year.
Mobilisation and logistics
Mobilisation is the transition from peace to war: reserves, the Territorial Army, industrial conversion and transport. The 2001-02 Operation Parakram exposed slow mobilisation and prompted Cold Start thinking about rapid, shallow, integrated battle groups, which Pakistan answered with tactical nuclear weapons such as Nasr.
Worked example
Why does a large capital budget not guarantee capability? Because committed liabilities, offset obligations and single-vendor imports delay delivery, and revenue spending crowds out acquisition. The analyst tracks actual expenditure against allocations, not announcements.
Traps
Equating spending with capability; ignoring pensions; treating offsets as free money; asserting that India formally announced the Cold Start doctrine.