Violence cost India $742 billion in 2016: Report

The Global Peace Index 2017 shows India's ranking has improved under the Modi government

The Global Peace Index 2017 released by Sydney-headquartered Institute for Economics and Peace has ranked India 137 and Mexico 142 out of 163 nations in a report released earlier this month. Since 2011 when the index was first published, Mexico has always but once, been ranked above India despite having some of the most violent towns in the world. The index throws up many interesting facets of the evolving security situation in India and its impact on economic growth.

While India’s ranking has improved over the years, the report estimates that in 2016 India lost almost $742 billion or 8.6% of its Gross Domestic Product (GDP) to violence. In 2016, violence cost India $680 billion or around 9% of its GDP. In 2015, that figure was at $342 billion or 5% of India’s GDP. In 2014, these costs were $177 billion or 3.6% of the GDP according to the indexes studied over time. (SEE TABLE)

The report notes, “India has moved up four positions in the overall ranking. This has largely been due to a reduction in the level of violent crime, driven by increased law enforcement. Meanwhile, unrest in Indian-administered Kashmir in mid-2016 raised tensions between India and Pakistan. The number of deaths from external conflict increased in both countries.”

One of the reasons for India’s overall improvement in rankings seems to be a decrease in deaths due to internal conflict. The report notes that India is one of the nations that has registered a maximum decline in deaths in internal conflicts.

However, this wasn’t the case until 2012. The Global Peace Index 2013 had noted that for the first time since 1994, the total number of fatalities linked to conflict within India dropped below four figures “with a notable decline in deaths related to Islamist terrorism and insurgency in Jammu and Kashmir. This is the continuation of a trend started in 2001. There was also a reduction in violence and fewer fatalities associated with the Maoist insurgency.”

According to Institute of Conflict Management’s database, civilian and security deaths in Naxal violence has shown a significant decline since 2012 when 104 security personnel were reported to have been killed in combat with Naxals. In 2016, less than 60 of them died in combat. Civilian deaths and overall causalities including among Naxals has also declined since then.

The reduction in causalities in internal conflict also partly explains a marked increase in the cost of violence in India. The report notes that internal security spending constitutes almost a third of the cost of containing violence. In India, there has been a gradual increase in allocations for internal security over the years.

In 2014-15, the ministry was allocated $95 billion. In 2017-18, it has been allocated $129 billion. The Central Police Reserve Force (CRPF), deployed to fight left-wing extremists continues to be the highest recipient of this money from the ministry. According to Institute of Defence Studies (IDSA), the CRPF was given $2.7 billion in 2017-18, a 10% hike over the last fiscal.

Although internal security problems continue to bog down the Indian economy, the primary contributor to cost of containing violence is military expenditure. According to the report, 39% of the cost of impact of violence globally was military expenditure. In 2014, military expenditure constituted almost half that figure. India has been one of the highest growths of heavy weapons capabilities from 1987 to 2016. The report notes that its military expenditure has grown by 193% while the strength of its armed forces has increased 118% during the same period.

Surprisingly, India is the only one among the US, China and Russia which has significantly increased the number of its armed personnel from 1995 to 2012. While the number of military personnel increased by 27%, defence spending as a proportion of the GDP remained almost constant during the period. This seems to indicate that while India is spending more on salaries of personnel than on weapons. The report notes, “If India, like other nations, can reduce the cost of economic impact of violence it can realise a larger peace dividend.”

A look at terror attacks in Kashmir shows that major instances of cross-border attacks have increased significantly since 2014. In 2016, 165 people including terrorists, civilians and security forces were killed in 34 major instances of terror attacks in the valley. In 2014, 108 people were killed, a third of whom were security forces.

With increasing attacks on security forces in Kashmir, greater private participation in the defence manufacturing sector and with Modi government hiking defence allocation by almost a third since presenting its first full budget in 2015, a peace dividend may not be something India may be looking to reap soon.