Conclusion
Militaries in all  countries increasingly have to contend with the following constraints:
•Mounting public demand for reduction in defence outlay and  seeking justification for major expenditure. Defence budgets have failed to  keep pace with inflationary trends. This has resulted in falling defence allocations  in real terms.
•Ceilings on manpower and rising manpower costs.
•Exorbitant equipment costs, especially of high-tech systems.
•Increasing public scrutiny resulting in demands for transparency  and justification for defence expenditure.
•Rapidly changing face of conflicts in recent times. Unconventional  conflicts and internal security concerns necessitate entirely different  treatment.
•Difficulty in forecasting realistic long term force  requirement due to unpredictable nature of threats. Consequently, defence  planners tend to be over-cautious and play safe, more so as militaries cannot  be expanded instantly when crisis become imminent.

Above constraints notwithstanding, militaries continue to be  responsible for safeguarding national interests. There is no dilution in that.  Militaries cannot fail their nations. It is for the defence planners to devise  innovative measures for optimum utilisation of allocated resources. Defence  economics can be of immense help as a tool of decision making. It can assist in  the evolution of policies, force levels, their structures and functioning to  achieve national strategic objectives with least burden on the national  exchequer.

Economics of defence cannot be ignored as defence consumes  considerable resources. Though defence and economic development are complementary, they have a mutually  antagonistic relationship as both vie for the same pie. Application of defence  economics can reconcile the two and optimise returns.

In India, there is a pressing need to inculcate a culture of  cost consciousness.It is time to get over  the old approach that defence matters are beyond economic justification.Policy makers should learn to take decisions with  cost as an important parameter. Additionally, there is a need to develop a pool  of expert defence economists who could provide inputs for considered decision  making.

About Author – Major Gen Mrinal Suman is  India’s foremost expert in defence procurement and procedures and offsets. He  heads Defense Technical Assessment and Advisory Services Group of CII.