The ambitions of India’s military to modernise and centralise its defence systems are increasingly being constrained by severe fiscal constraints. These limitations arise from rising personnel costs, competing developmental priorities, mounting pension liabilities, and the challenge of acquiring advanced military technologies on a finite defence budget. While conventional policy debates focus narrowly on increasing budgetary allocations or reforming defence procurement, the solution to this structural conundrum may lie in India’s own rich traditions of statecraft. While crowdfunding cannot replace state financing, it can complement it by mobilizing “patriotic capital.” This article explores ancient Indian economic principles and examines how contemporary digital crowdfunding platforms—conceptually rooted in classical Indian defence economics—could provide vital supplementary funding for military welfare, veterans’ rehabilitation, technological innovation, research and development, and strategic infrastructure.

Introduction

In October 2023, the Indian Army, in collaboration with the United Service Institution of India (USI), launched Project Udbhav. This initiative seeks to find innovative solutions to contemporary, multi-domain security challenges by looking into the indigenous knowledge systems of ancient India (United Service Institution of India, 2023). As the Armed Forces stand on the threshold of their most significant structural overhaul since independence—the transition toward Unified Theatre Commands—strategic thinkers are increasingly looking back to classical texts like the Mahabharata, the Thirukkural, and Kautilya’s Arthashastra for guidance. However, while the intellectual blueprint for a modern, integrated military is rapidly taking shape, its physical realization is being choked by a harsh economic reality.

Year after year, the Union Budget allocates monumental sums to defence, yet a staggering lion’s share of these resources is consumed before a single advanced drone, fifth-generation fighter jet, or stealth frigate can be procured. The massive budgetary allocations required for personnel salaries and pensions have become the defining “elephant in the room” in Indian defence planning (Behera, 2020). To resolve this fiscal gridlock, this paper analyses how classical tenets can be synthesised with modern financial technology. By utilising contemporary Digital Public Infrastructure (DPI), the state can channel civic contributions into critical defence-adjacent sectors, thereby alleviating the strain on the core defence treasury.

The Classical Anatomy of Fiscal Crisis

To understand why the defence apparatus of a contemporary nation-state might falter under fiscal stress, one can consider the nation’s own classical heritage. In the Saptanga (Seven Limbs) theory of the state propounded by Kautilya in the Arthashastra, the treasury (Kosha) and the military/force (Danda) exist in a state of delicate, symbiotic interdependence (Kautilya, trans. 1992). Kautilya explicitly warns that the Danda cannot exist without a sustainable Kosha:

“All undertakings depend upon finance. Hence, foremost attention shall be paid to the treasury.” (Kautilya, trans. 1992, 2.1.16)

Kautilya admonishes that a ruler who maintains an undisciplined army, or a vast military force that hollows out the treasury, will ultimately cause the state to destroy itself from within.

Similarly, the Nitisara, penned by Kamandaka, reinforces this balance through the concept of Ashta-Varga (the eight-fold division of state revenue and expenditure). Kamandaka categorises state spending into productive allocations—such as the fortification of strategic outposts—and over-extended, wasteful expenditures (Kamandaka, trans. 2018). In other words, classical Indian defence economics dictates that a state must aim for strategic security and modernization without triggering the critical depletion of the central treasury.

The Modern Disequilibrium: What Causes The Fiscal Crunch

The operational ambitions of the Indian Armed Forces, most notably the ongoing transition toward integrated, high-tech Unified Theatre Commands, demand a massive infusion of capital. Contemporary multi-domain warfare requires heavy investment in space-based surveillance systems, drone swarms, and artificial intelligence. However, the current budgetary distribution leaves little room for such disruptive innovation.

In typical modern Indian defence budgets, active revenue heads such as salaries consume approximately 27% of the total defence allocation, while defence pensions account for roughly 22% (Behera, 2021). Combined, personnel costs (heavily impacted by schemes like One Rank, One Pension) swallow nearly 49% of the entire defence budget. Meanwhile, operational sustenance, stores, and fuel account for roughly 20%, and capital procurement for new hardware takes up approximately 28%. This leaves defence Research & Development (R&D) struggling with a modest allocation of around 3% to 5% of the overall budget (Ministry of Defence, 2024).

Typical Modern Indian Defence Budget Allocation (Rajiv, 2023):

Effectively, for every 100 rupees allocated toward national defence, nearly half is spent on personnel upkeep, leaving insufficient state capital to aggressively pursue next-generation technological modernization.

Pranaya in the Digital Age: Mobilizing Patriotic Capital

When structural pressures strain the central treasury, classical Indian statecraft does not prescribe passive austerity or strategic retreat. On the contrary, it urges the state to organically engage civil society. In the Arthashastra, Kautilya introduces a specialised fiscal mechanism known as Pranaya (literally translated as “requests of affection”). Historically, during acute national emergencies or transitional fiscal crises when the state treasury was depleted, the ruler would make structured appeals to wealthy merchant guilds (Shrenis) and other prosperous actors within the economic ecosystem (Kautilya, trans. 1992). Pranaya was neither viewed as a failure of the state nor as a punitive tax; rather, it was a voluntary, benevolent civic alignment with national survival.

This principle is mirrored in the Shanti Parva of the Mahabharata. Here, Bhishma Pitamaha explains to King Yudhishthira that it is imperative to deploy the principle of Pranaya when the Janapada (the territory and its people) or national survival is at stake (Vyasa, trans. 2015). Bhishma asserts that making a righteous appeal to the public for national defence is an act of Dharma, and citizens should fulfil it without hesitation, as the security of the individual is fundamentally tied to the security of the collective.

Deploying Pranaya in the 21st Century

In the contemporary era, the fiscal strain of defence spending requires a modern reincarnation of Pranaya. While a direct public appeal for cash to purchase main battle tanks or fighter squadrons is macroeconomically unfeasible and structurally insufficient, the targeted mobilization of “patriotic capital” can successfully offset non-lethal defence liabilities.

India possesses a unique structural advantage to pioneer this transition: its world-class Digital Public Infrastructure (DPI), anchored by the Unified Payments Interface (UPI) and a robust, tech-savvy retail investor base. The application of crowdsourced funding models within India’s security landscape has already witnessed success. Micro-philanthropy platforms like Bharat Ke Veer, which allows citizens to directly contribute financially to the families of martyred Central Armed Police Forces (CAPF) personnel, demonstrate a deep, latent public willingness to financially engage with national security (Ministry of Home Affairs, 2017).

By expanding this framework into an institutionalised digital crowdfunding ecosystem, the state could channel public capital directly into:

• Veterans’ rehabilitation and tertiary military healthcare.
• Defence-adjacent deep-tech start-ups and university R&D fellowships.
• Dual-use strategic infrastructure projects in border regions.

This would effectively free up billions in sovereign revenue, allowing the core defence budget to focus entirely on capital hardware acquisition.

Conclusion

The transition of the Indian Armed Forces into integrated, multi-domain Unified Theatre Commands represents a monumental milestone in military evolution. Yet, as Project Udbhav correctly identifies, structural reorganizations cannot achieve true operational efficacy if they are delinked from the civilizational philosophy that originally shaped the subcontinent’s strategic thought.

By resurrecting the classical Indian tenets of Pranaya and societal Dharma, modern policy-makers can introduce a powerful complementary paradigm: the institutionalization of digital crowdfunding to mobilise patriotic capital. Far from being a modern policy anomaly, this concept finds its spiritual and practical justification in the highest echelons of contemporary Indian leadership. A profound modern precedent of this ancient ethos has been set by Prime Minister Narendra Modi, who has consistently auctioned state mementos, personal gifts, and civilian honours received from foreign nations, directly channelling those hundreds of crores of rupees into national development and ecological schemes like the Namami Gange mission (Prime Minister’s Office, 2019). Serving as an institutional blueprint for the nation, this practice demonstrates that funding the state’s highest duties is an organic, shared endeavour, one that can be catalysed by leadership and sustained by its citizens.

Title Image Courtesy: https://www.ajaishukla.com/

Disclaimer: The views and opinions expressed by the author do not necessarily reflect the views of the Government of India and the Defence Research and Studies.

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