Cost of War will Be in Human Terms

[Guest guest]

Cost of an Indo-Pak war would be strictly in human terms

 

"The real cost of wars is in human terms.

And no money values can be ascribed to

the loss of life."

Jasjit Singh

(The author is an Air Commodore)

 

India and Pakistan have both mobilised

their military forces. The anger levels in

India after the 13th December attack on the

Parliament are running high, especially as

it comes after Kargil and the one on

J&K legislature on October 1.

 

The risks of war increase with every

little bit of escalation. The stock exchange

appears to show nervousness, and the Sensex

had fallen by more than 200 points from 3,410

on 13th December to 3,233 by last Wednesday,

while the value of Rupee against the US Dollar

also declined. The question naturally being asked

is: what will a possible war cost?

 

It is important to understand that the

criteria for calculating the economic cost

of war vary a great deal. Most of the studies

on economics of war relate to the long wars like

World War II or of the cost of military preparedness.

The shorter duration wars of 30-60 days or less are

conducted with forces that exist with a country.

The expenditure on current inventory of weapons,

equipment has already been invested, and thus,

would be treated as "sunk costs." The additional

costs would be that of consumables

(like ammunition, fuel and other stores),

operational works (like building bunkers etc.)

and compensation (for damage to property and

for loss of life etc.). These costs would

include urgent purchases from abroad

(like the Bofors gun ammunition and high

altitude clothing items during the Kargil War).

 

In essence, the costs are in the revenue segment

of defence budget and little goes out under the

capital head of expenditure where much higher

levels of sums are involved.

 

The second aspect of economics of defence

is the impact of overall defence spending on

the economy. There are numerous empirical

studies from western institutions and experts

that prove that defence expenditure in

developing countries does not have a

negative effect on economic growth as

long as defence spending remains below

approximately 6 percent of the GDP.

Our expenditure has been averaging

below 3 percent for four decades and

stands at 2.57 per cent for the current year.

OECD studies, in fact, prove that India's

defence expenditure over the decades has

had a positive impact on economic and

industrial growth.

 

Our past experience indicates an official

costing of the 1965 war at Rs 50 crores

(when the annual defence expenditure was Rs 884 crores).

The government had stated that the cost of

the Kargil War in 1999 was Rs 1,894 crores

(out of the defence expenditure of Rs 47,070 crores).

This would indicate of the cost of a war of 2-12

week war to be around 4-5 percent of the defence

expenditure which would amount to about Rs 3,000 crores.

This would be considered affordable and absorbed

within the budget with little reason for the

Sensex or currency to start being jumpy.

But this approach tends to ignore the other aspects.

 

One concerns weapons and equipment that

gets destroyed and damaged in war.

This requires replacement and those costs

are normally higher than the original procurement

price. In our case, we normally maintain what is

termed as "war wastage reserve" which takes care

of losses of the type that we are likely to experience.

Their cost also falls in the category of "sunk"

investment. Costs go up substantively if replacement

with a new design, technology or type of

weapon system is required. But this situation

arises only if the losses have been large scale

which can happen only if the country suffers

a major military defeat.

 

While in absolute terms, our defence

capability has been declining since the

late 1980s because of substantive

under-funding of defence, especially

modernisation and re-equipment under

the capital head, the issue is the

capability in relation to that of our

adversary. Pakistan's defence capability

also has been under severe stress since

1990 when US sanctions started to squeeze

its imported equipment. It has increasingly

relied on the Chinese sources and those

weapons systems do not necessarily give

it a qualitative edge.

 

On the other hand, Paris Club has

rescheduled Pakistan's massive

bilateral debt of $12.5 billion

(out of the total external debt of

$38 billion) coincidently on the

eve of the terrorist attack on the

Indian parliament for repayment over

38-23 years! This would mean an

annual $ 900 million relief in debt

repayments in the coming years,

making more money available for

arms purchases in future. But

India's overdue modernisation would

take care of that. The overall balance

of military capability, therefore,

continues in India's favour.

 

The real cost of wars is in human terms.

And no money values can be ascribed to

the loss of life. heBut it demands that

both, political and military, goals and

objectives of war are carefully weighed

in the approach to war.

 

Given the reality of nuclear weapons with

both countries it is essential that a war,

if it erupts, must be kept well below the

level where nuclear weapons could get used

(even if in our assessment the damage to

Pakistan would be far greater than to us).

Nuclear bluffs are not called without grave

risks. This means that the war will have to

be kept limited.

 

While there is little doubt that we

would win that war, the problem is the

perceptions rather than the reality of

that victory. Firstly, the international

community would lean very heavily on both

countries to disengage reducing the scope

of "punishing" Pakistan. Secondly, a border

skirmish would lead to the image of the

smaller country having won since it would

not have been defeated decisively. If that

happens there would be little political

gains of a war for us. There is every

possibility that as the ratcheting up

of military mobilisation continues,

Pakistan may opt for an adventure as

they have done so often in the past

and we get sucked into a war.

 

We, therefore, need to calibrate our

military posture so as to ensure that

political gains are maximised rather

than risked. The United States has

banned the two key terrorist

organisations operating out of Pakistan.

The steps taken by Pakistan are not enough.

But, we should exploit this by continuing

the politico-diplomatic offensive while

holding back on the military public posture.

 

(The author is an Air Commodore)