New Delhi’s recent defence budget announcement for fiscal year (FY) 2026-27 represents more than just a budgetary jump; it carries important implications for South Asian stability, warranting closer reflection.
The allocation of USD 85 billion to defence, with capital expenditure rising by 22 per cent compared with a 17 per cent increase in revenue expenditure, reflects the government’s prioritisation of accelerated military modernisation over routine operational sustainment.
Within capital expenditure, allocations for naval platforms and aircraft stand out. This is consistent with the government’s enormous spending requirements for the ambitious plans announced in recent months; the deal to purchase 97 Tejas Mk1A light fighters, the plan to acquire 114 Rafale fighter jets, the Navy’s flagship programme, Project-75I, to build six modern diesel-electric submarines, are a few examples of India’s broader modernisation efforts. These appear aimed at both addressing shortfalls, especially in fighter squadron strength, and advancing conventional military advantage.
In his book The Causes of War, Geoffrey Blainey wrote that anything that increased optimism was a cause of war; conversely, anything that dampened that optimism was a cause of peace. Blainey equated this optimism with the strategic confidence among the initiating state’s decision-making elite that a quick military victory was achievable. While a simple causation between optimism and conflict would be reductionist, sufficient evidence suggests that strategic confidence meaningfully shapes a state’s foreign policy behaviour.
Within the South Asian context, this dynamic is already evident when examining the crisis trajectory between India and Pakistan. Over the past decade, South Asia has experienced recurrent crises between its two nuclear-armed arch-rivals, with each crisis following a broadly similar pattern: a terrorist incident followed by New Delhi’s quick attribution of blame to Pakistan without presenting publicly verifiable evidence and a subsequent military action, followed by a retaliatory response by Pakistan. However, while the pattern has been familiar, the latest crisis in May 2025 marked a significant escalation beyond previous thresholds as India reportedly launched missile strikes and drone incursions inside Pakistani cities, demonstrating a reduced restraint on the use of force – a likely consequence of India’s growing perception of technological superiority vis-à-vis Pakistan in recent years.
According to data from the Stockholm International Peace Research Institute (SIPRI), by 2024, India was spending over eight times as much on defence as Pakistan, up from 5.7 times in 2018, a year before the Pulwama-Balakot crisis. Consistent with this trend, from FY 2018-19 to FY 2024-25, India’s capital acquisition expenditure within the defence budget showed a compound annual growth rate (CAGR) of roughly 10 per cent compared to around 5 per cent from FY 2016-17 to FY 2018-19. Additionally, in 2020, New Delhi began receiving Rafale fighters under the 2016 agreement with France, which Indian officials regarded as the linchpin of the country’s air power modernisation, and in 2021, India received its first delivery of the S-400 air defence system, widely projected as a game-changer.
As a result, in the years preceding the war, Indian officials’ statements increasingly echoed New Delhi’s growing perception of military superiority. For instance, in 2021, India’s then Chief of Air Staff, Air Chief Marshal RKS Bhadauria, stated that India’s air power capabilities had significantly increased since the Balakot strikes and that the country now had an edge in its ability on both the Western and Northern fronts. Earlier in 2019, the then Chief of Air Staff, Air Chief Marshal BS Dhanoa, had said that the proposed induction of Rafale and the S-400 surface-to-air missile system in the next two to three years would shift the technological balance in India’s favour. Similarly, in 2020, following the arrival of the first batch of Rafale fighters, Indian Defence Minister, Rajnath Singh stated that anybody who wanted to threaten India should be worried about its new capability, representing just few of several public assertions reflecting this growing confidence. These statements suggested a perception of control over events, which likely drove the decision-making elite to take a riskier route during the May crisis.
The current modernisation momentum is expected only to reinforce these perceptions, sustaining the risk of escalation. While India continues to deny Pakistan’s claims of having downed seven Indian aircraft, the Indian Chief of Defence Staff, without specifying a number, has acknowledged the country’s jet losses during the clash. However, despite New Delhi having faced a major setback in the May escalation, subsequent official statements continued to echo themes of military superiority. For instance, following the escalation, the Director General of the Indian Army Air Defence emphasised that India had an adequate arsenal of weapons to take on Pakistan right across its depth. Likewise, the Indian Union Minister of State for Defence, while reflecting on the May crisis, expressed pride in India’s growing defence budget and indigenisation.
Although such statements may be interpreted as efforts to boost the population’s morale, India’s rapid military modernisation push, combined with repeated war rhetoric, suggesting readiness to escalate, in itself, indicates the persistence of optimism about the ability to achieve strategic objectives without triggering nuclear escalation. When leaders use war rhetoric, they are aware of its consequences, as it shapes audience expectations and, over time, can create, sooner or later, pressure to act in accordance with those signals.
Any such optimism, however, may be misplaced. The May 2025 crisis highlighted the lack of effective bilateral crisis-management frameworks, which can increase the risk of inadvertent escalation. At the same time, growing conventional military asymmetry risks lowering escalation thresholds. As these imbalances widen, the relatively weaker side may rely more heavily on nuclear deterrence, thereby narrowing the space for sustained conventional conflict.
The current trajectory, therefore, calls for reassessment. Scholarship on optimism and conflict suggests that adverse experiences may not always reduce strategic confidence among decision-making elites. Policy change is more likely when domestic actors — including the public, media, and political leadership — meaningfully challenge prevailing strategic assumptions. In India’s case, the prominent role of foreign policy in domestic politics may make such scrutiny particularly significant. Without it, the continuation of current trends risks deepening instability in South Asia, where successive crises could intensify.
Zahra Niazi is a Research Associate at the Centre for Aerospace & Security Studies (CASS), Islamabad.
This article is published under a Creative Commons License and may be republished with attribution.
