India Vs. China: Budget Estimates for 2025-26
According to recent estimates, China’s budget for 2025-26 is significantly larger than India’s, with China’s defense spending alone being over three times that of India; China’s defense budget is estimated around $245 billion, while India’s is around $79 billion, highlighting a substantial gap in military expenditure between the two nations.
China’s overall budget for 2025-26 is considerably larger than India’s, with a significant portion allocated to defense spending. China’s defense budget is estimated to be more than three times larger than India’s.
Both India and China have announced their budget estimates for the fiscal year 2025-26, reflecting their economic priorities and strategies.
India’s Budget Estimates for 2025-26:
Gross Domestic Product (GDP): India’s GDP is projected at $4.271 trillion for the fiscal year 2025-26.
Fiscal Deficit: The fiscal deficit is targeted at 4.4% of GDP, indicating the government’s plan to manage its expenditures relative to its revenues.
Taxation Reforms:
Income Tax: A complete tax rebate has been introduced for incomes up to ₹12 lakh under the new tax regime, effectively exempting individuals earning up to this amount from income tax.
Standard Deduction: The standard deduction has been increased from ₹50,000 to ₹75,000, providing additional relief to taxpayers.
Major Expenditures by Ministry:
Ministry of Finance: Allocated ₹19.39 lakh crore, accounting for approximately 38.28% of the total expenditure.
Ministry of Defence: Allocated ₹6.81 lakh crore, representing about 13.45% of the total expenditure.
Ministry of Road Transport and Highways: Allocated ₹2.87 lakh crore (5.67%).
Ministry of Railways: Allocated ₹2.55 lakh crore (5.04%).
Ministry of Home Affairs: Allocated ₹2.33 lakh crore (4.60%).
These allocations highlight the government’s focus on infrastructure development, defense, and internal security.
China’s Budget Estimates for 2025-26:
Economic Growth Target: China has set an ambitious GDP growth target of around 5% for 2025, despite challenges such as domestic economic slowdown and escalating trade tensions with the US.
Fiscal Deficit: The budget deficit is projected at 4% of GDP, reflecting a proactive fiscal policy to stimulate the economy.
Inflation Target: An inflation target of 2% has been set for 2025, the lowest since 2003, indicating concerns about deflationary pressures.
Defense Spending: Defense expenditure will rise by 7.2% to approximately 1.785 trillion yuan ($398 billion), underscoring a focus on enhancing military capabilities amid a “severe external environment.”
Agriculture and Food Security: The grain production target has been increased to around 700 million metric tons, with the agriculture stockpile budget raised by 6.1% to 131.66 billion yuan ($18.12 billion), aiming to enhance food security amid escalating trade tensions.
India’s 2025-26 budget emphasizes tax relief, infrastructure development, and defense, while China’s budget focuses on sustaining economic growth, increasing defense spending, and ensuring food security.
India Vs. China: Budget Estimates for 2025-26
India:
Total Defence Budget: Rs 6.81 lakh crore (approximately $79 billion) for 2025-26, marking a 9.53% increase from the previous year.
GDP Share: Defence spending accounts for about 1.9% of India’s GDP.
Key Focus Areas:
Modernization and self-reliance in defence production.
Strengthening border security, particularly along the Line of Actual Control (LAC) with China.
Enhancing naval capabilities in the Indo-Pacific region.
Expanding missile capabilities, including the Agni and BrahMos series.
China:
Total Defence Budget: Estimated to be between $232 billion and $309 billion, with recent reports suggesting it could be over $245 billion.
GDP Share: Officially around 1.5%, but analysts believe the actual figure could be significantly higher due to dual-use investments.
Key Focus Areas:
Expanding military reach and technological edge, particularly in the Indo-Pacific.
Hypersonic weapons, AI warfare, and space-based military systems.
Upgrading military infrastructure along the India-China border.
Strategic Implications
India: Faces challenges in maintaining deterrence against China and Pakistan while pursuing self-reliance in defence production. The budget increase aims to address capability gaps through advanced acquisitions.
China: Continues to expand its military capabilities, with a focus on technological advancements and strategic infrastructure development. This poses significant strategic challenges for India.
Economic Context
India’s Total Budget: Estimated at $580 billion (₹50.65 trillion) for 2025-26, with defence spending being a fraction of this total.
China’s Economic Scale: China’s larger economy allows it to spend significantly more on defence in absolute terms, despite India’s higher GDP share for defence
When comparing the budget estimates of India and China for 2025-26, particularly regarding defense, several key points emerge:
Defense Spending Disparity:
China’s defense budget significantly surpasses that of India. This disparity highlights the differing scales of military expenditure between the two nations.
It’s important to note that reported figures for China’s defense spending may not reflect the full extent of their military-related expenditures.
India’s Focus:
India’s defense budget for 2025-26 demonstrates a focus on:
Border security.
Military modernization.
“AatmaNirbhar Bharat” (self-reliant India) in defense production.
India is working to reduce its dependance on foreign imports.
China’s Objectives:
China’s substantial defense spending supports objectives such as:
Modernizing the People’s Liberation Army (PLA).
Expanding its military reach.
Asserting its influence in regional disputes.
