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Nuclear Arms, the Budget and the Economy

The completely irrational and mindlessly destructive nature of a nuclear arms race is well known. But it also involves a major escalation in expenditure, particularly on delivery systems, the command, control, communications and intelligence (C3I) systems and on other items related to it. Therefore, nuclear weapons cause a substantial diversion of resources away from productive and socially important uses. What is even worse is that such public expenditure is rarely open and explicit; it tends to be opaque and couched in secrecy. The lack of transparency -- even in economic/financial terms -- which is inherent in such weapons programmes is fundamentally antithetical to democracy.

The cost of the nuclear weapon itself may not be very high; however the cost of the system as a whole is very high. The US, after arguing that nuclear weapons were a cheaper option, spent four trillion dollars on the nuclear weapons, its delivery and its C3I systems in the last fifty years. Only 10%($375 bilion) of this cost went towards the cost of the weapons themselves, the rest was the delivery systems ($2 trillion), C3I system ($1 trillion), etc. Thus, when arguments are advanced regarding the low cost of nuclear weapons, what is sought to be hidden from public view is that the cost of the bomb is not the main cost of a nuclear weapons program. It is in this light that we must examine the cost of the nuclear weapons program in this country.

The 98-99 Budget

The latest Budget just presented by the BJP government, after the nuclear explosions, involves a 14 per cent increase in the defence budget over last year's revised estimates. This comprises an increase of Rs. 4038 crore in revenue expenditure and Rs. 1063 in capital expenditure. The government has argued that most of this increase will go towards increased salaries as a result of Pay Commission awards. But if past practice is any guide, the likelihood is that the more substantial increases in expenditure that are associated with a nuclear programme, and especially with nuclear weaponisation, are not explicitly defined as being under the defence budget, but are put under various different Budget heads as well as in off-Budget items such as the resources/expenditure of certain public sector enterprises whose production is in related areas. The only explicit increases in budgetary expenditure which reflect the nuclear programme are in the outlays for the Department of Atomic Energy (a 59 per cent increase, from Rs. 987 crore to Rs. 1569 crore) and in the Department of Space (a 62 per cent increase, from Rs. 850 crore to Rs. 1381 crore), which are not a part of the stated Defence Budget.

To put some of these numbers in perspective, it is worth comparing them with some other items of central Government expenditure. Thus, the total outlay for the Ministry of Health and Family Welfare in the 1998-99 Budget is put at only Rs. 3684 crore, well below just the increase in defence expenditure. The increase in allocation to the Departments of Space and Atomic Energy alone (at Rs. 1366 crore) is more than 5 times greater than the increase in the outlay for health, 52 per cent higher than the increase in the Central education outlay, 72 per cent higher than the increase in allocation for rural employment and poverty alleviation. This reflects only the tip of the iceberg of the potential costs of a weaponisation programme, so that the scale of consequent diversion of resources can only be guessed at.

According to Indira Gandhi (1981), the cost of making an inter-continental ballastic missile is 340,000 primary schools or 65,000 health care centres. Our proirities are no longer schools and health care centres; that is why the Ministy of Human Resource Development (HRD) is looking at doing away with constitutional guaranetees regarding education. The state can no longer educate the people; it has to make nuclear weapons!

The Cost of the Nuclear Weapons Program

Before we enter into a guesstimate of India's nuclear program, certain observations are in order. The cost of the weapons program that has already been undertaken -- the fissile stockpile built -- has already been paid for under the nuclear power program. This makes it difficult to separate the costs of the weapons program from that of the power program. The Atomic Energy Commission can play with these figures to show a lower cost per bomb and absorb the rest in the power program. Similarly, the cost of the missile program can also be underwritten by the satellite launch vehicle program of Indian Space Research Organisation (ISRO). These are not mere conjectures. It is well known that this has been the method that India has followed to develop its nuclear and missile capabilities in which the civilian program has been used to underwrite the military program. Further, there are other transfers that have been made in the past to hide the true defence costs -- transfers to public sector undertakings, etc.

The few previous indications of the costs of creating and deploying nuclear weapons suggest that such costs would be much higher than the costs currently being bandied about. A study by the Ministry of Defence in 1985 estimated the cost of creating nuclear weapons which could be deployed at Rs. 7,000 crore at that time. In terms of the domestic rate of inflation, such an amount would come to around Rs. 18,000 crore in current prices. But a substantial part of the expenditure would involve imports, so if the change in rupee value (relative to the US dollar) is taken into account, then this amounts to Rs. 24,000 crore. If it is estimated that around one- third of such expenditure involves imports, then the likely current cost works out to at least Rs. 20,000 crore. This relates to the total stock cost of a nuclear weaponisation programme. It should be noted that the major cost of deployment of nuclear arms is accounted for by non-nuclear missile components, C3I etc., and also that a very large proportion of such hardware tends to be imported.

This refers to the stock cost of creating a nuclear arsenal. There is also a continuing cost involved in maintaining a credible nuclear deterrent. An estimate made by Admiral Nayyar four years ago puts this at 0.5 to 1 per cent of GDP, or at around Rs 8,000 to Rs 16,000 crore. It should be noted that a nuclear weapons programme is never a substitute but always in addition to non-nuclear defence expenditure. Thus all of these are additional expenditures. It is evident that such increases in defence expenditure have not been fully incorporated into the Budget, even accounting for the facts of opacity and cover-up. So if the government does decide to go in for weaponisation, such costs will then shoot up. In over all terms, we are then looking at a defence budget of atleast 4% of the GDP (if all hidden costs are taken into account), a large portion of which will be in foreign exchange. It may be noted that the balance of payments crisis that India had in 1991 was the direct result of increased defence expenditure which went upto 4% of GDP under Rajiv Gandhi.

High Military Research and Development Expenditure

Apart from the cost for defence as shown in the budget, India has a very high R&D expenditure for the military. Though a large part of this expenditure can be questioned regarding its utility -- the Light Combat Aoircraft (LCA) project, the Main Battle Tank (MBT) being some examples -- a major part of this expenditure today is related to developing missile and other delivery systems. The other delivery systems include also the design and development of nuclear submarines and the sea-based missiles -- the Sagarika. DRDO, which is the nodal agncy for all defence reasearch except the actual bomb development has a capital budget of Rs.700 crore for 98-99. The total spending in 96-97 of DRDO was Rs.1,700 crore. India has one of the highest cost military R&D expenditure as a a percentage of total military expenditure -- 6.5%. Only four countries spend more on reaserach as a percentage of their total military expenditure.

India also spends the major part of its R&D budget (68.5%) in Science and Technology (S&T) only on defence related areas: nuclear, space and direct military R&D. Only US spends a higher fraction of its S&T spending on defence.

Nuclear "Security" and Economic Slavery: the BJP Swadeshi

The most important economic cost of these programme of nuclear weaponisation may not be represented simply in the diversion of valuable resources which it entails. It has also involved a situation where the government, having flexed its military muscles, is now anxious to placate foreign governments and international capital by offering economic concessions, through greater liberalisation, greater incentives for foreign investors and offering the opportunity to enter captive Indian markets and buy up domestic assets cheaply. The Government has already been arguing that they will entice private capital to meet the sanctions. This will have the "benefit" of creating a stake in the US business community against sanctions. Already, counter guarantees to power projects, oil and mining concessions have been give as a part of this policy. The BJP Government has also indicated that it is going to allow foreign insurance companies to enter India as a part of a package deal to lift sanctions. What other measures are involved in such a package is not known, but in all likelihood, it will mean further concessions in WTO, particularly allowing foreign investments under the new Multilateral Agreement on Investment proposals that US and other advanced countries have been pushing and in changes to the Patent Act.

This is the most dangerous path of all for the country, for it implies a double waste of our resources and our potential, and creates irrevocable changes which will truly compromise our national sovereignty and security. Self-reliance and sovereignty are apparently restricted to only nuclear weapons in BJP's lexicon. Surrendering economic sovereignty and sabotaging Indian technology in all other areas except military is BJP's newest version of "Swadeshi" -- the "Swadeshi" bomb and "Videshi" everything else. The pertinent question to ask is if we surrender economic sovereignty, what is the security that we have gained?

Prepared as a draft for discussion in MIND, Movement in India for Nuclear Disarmament