Tag: India

  • Indian Capital Market: Understand their concept by Nature, Classification, Growth, and Development!

    Indian Capital Market: Understand their concept by Nature, Classification, Growth, and Development!

    What does the Capital Market mean? The capital market is a market which deals in long-term loans. It supplies industry with fixed and working capital and finances medium-term and long-term borrowings of the central, state and local governments. The Capital Market functions through the stock exchange market. A stock exchange is a market which facilitates buying and selling of shares, stocks, bonds, securities, and debentures. The capital market deals in ordinary stock are shares and debentures of corporations, and bonds and securities of governments. So, what is the topic we are going to discuss; Indian Capital Market: Understand their concept by Nature, Classification, Growth, and Development!

    Here are explained; Indian Capital Market: The Concept of Market understand by their Nature, Classification, Growth, and Development!

    The capital market plays an important role in immobilizing saving and channel is in them into productive investments for the development of commerce and industry. It is not only a market for old securities and shares but also for new issues shares and securities. In fact, the capital market is related to the supply and demand for new capital, and the stock exchange facilitates such transactions.

    Thus the capital market comprises the complex of institutions and mechanisms through which medium-term funds and long­-term funds are pooled and made available to individuals, business and governments. It also encompasses the process by which securities already outstanding are transferred.

    Nature of Indian Capital Market:

    Like the money market, capital market in In­dia is dichotomized into organized and unor­ganised components. The institution of the stock exchange is an im­portant component of the capital market through which both new issues of securities are made and old issues of securities are pur­chased and sold. The former is called the “new issues market” and the latter is the “old issues market”. The stock exchange is, thus, a specialist market place to facilitate the exchanges of old securities. It is known as a “secondary market” for securities.

    The stock exchange dealings for “listed” securities are made in an open auction market where buyers and sellers from all over the country meet. There is a well-defined code of bye-laws according to which these dealings take place and complete publicity is given to every transaction. As far as the primary mar­ket or new issues market is concerned, it is the public limited companies instead of a stock market that deals in “old issues” that raises funds through the issuance of shares, bonds, debentures, etc. However, to conduct this busi­ness, the services of specialized institutions like underwriters and stockbrokers, merchant banks are required.

    The capital market in India is divided into the gilt-edged market and the industrial securities market. The gilt-edged market refers to the market for Govt. and semi-govt. securities. The industrial securities market refers to the market for equities and deben­tures of companies.

    The industrial securities mar­ket is further divided into:

    • New issues market, and.
    • Old capital market.

    Both markets are equally important but often the new issue market is much more important from the point of economic growth. Economic liberalization provides a strong stimulus to the security market. There is a tremen­dous growth in the number of issues, the amount raised, listed companies, listed stock, market turno­ver, and capitalization etc. Security market wit­nessed steep rising curve in the decades of 80s.

    Many new financial instruments were introduced; new institutions like Stock Holding Corporation of India Ltd, National Stock Exchange, Over the Coun­ter Exchange of India Ltd. etc. were created. Further, various steps were taken to protect the interests of investors and streamlining the trading mechanism. Computerization is done for faster set­tlement of transactions. Screen-based trading pro­vides the full transparency of the transactions. After the abolition of the managing agency system in 1970, the importance of the capital market in India cannot be overemphasized.

    The Indian capi­tal market has now been a very vibrant and grow­ing market. It is one of the leading capital markets in developing countries. We have the second largest number of listed companies (6500) in the world, next only to the USA have the largest number of exchanges in any country—23 Stock Exchanges. We have 15 million investors. And in the decade of 80s, the amount raised from the Indian capital mar­ket went up from Rs. 200 crores a year to Rs. 10,000 crores a year.

    The Indian capital market is the market for long term loanable funds as distinct from money market which deals in short-term funds. It refers to the facilities and institutional arrangements for borrowing and lending “term funds”, medium term, and long term funds. In principal capital market loans are used by industries mainly for fixed investment. It does not deal in capital goods but is concerned with raising money capital or purpose of investment.

    The Classification of Indian Capital Market:

    The capital market in India includes the following institutions;

    • Commercial Banks.
    • Insurance Companies (LIC and GIC).
    • Specialized financial institutions like IFCI, IDBI, ICICI, SIDCS, SFCS, UTI etc.
    • Provident Fund Societies.
    • Merchant Banking Agencies, and.
    • Credit Guarantee Corporations.

    Individuals who invest directly on their own insecurities are also suppliers of the fund to the capital market. Thus, like all the markets the capital market is also composed of those who demand funds (borrowers) and those who supply funds (lenders). An ideal capital market attempts to provide adequate capital at a reasonable rate of return for any business, or industrial proposition which offers a prospective high yield to make borrowing worthwhile.

    The Indian capital market is divided into the gilt-edged market and the industrial securities market. The gilt-edged market refers to the market for government and semi-government securities, backed by the RBI. The securities traded in this market are stable in value and are much sought after by banks and other institutions. The industrial securities market refers to the market for shares and debentures of old and new companies. This market is further divided into the new issues market and old capital market meaning the stock exchange.

    The new issue market refers to the raising of new capital in the form of shares and debentures, whereas the old capital market deals with securities already issued by companies. The capital market is also divided between the primary capital market and secondary capital market. The primary market refers to the new issue market, which relates to the issue of shares, preference shares, and debentures of non-government public limited companies and also to the realizing of fresh capital by government companies, and the issue of public sector bonds.

    The secondary market, on the other hand, is the market for old and already issued securities. The secondary capital market is composed of industrial security market or the stock exchange in which industrial securities are bought and sold and the gilt-edged market in which the government and semi-government securities are traded.

    The Growth of the Indian Capital Market:

    The following growth below are;

    Before Independence of Indian Capital Market:

    Indian capital market was hardly existent in the pre-independence times. Agriculture was the mainstay of the economy but there was hardly any long term lending to the agricultural sector. Similarly, the growth of industrial securities market was very much hampered since there were very few companies and the number of securities traded in the stock exchanges was even smaller.

    Indian capital market was dominated by the gilt-edged market for government and semi-government securities. Individual investors were very few in numbers and that too was limited to the affluent classes in the urban and rural areas. Last but not least, there were no specialized intermediaries and agencies to mobilize the savings of the public and channelize them to invest.

    After Independence of Indian Capital Market:

    Since independence, the Indian capital market has made widespread growth in all the areas as reflected by the increased volume of savings and investments. In 1951, the number of joint stock companies (which is a very important indicator of the growth of capital market) was 28,500 both public limited and private limited companies with a paid up capital of Rs. 775 crore, which in 1990 stood at 50,000 companies with a paid up capital of Rs. 20,000 crore. The rate of growth of investment has been phenomenal in recent years, in keeping with the accelerated tempo of development of the Indian economy under the impetus of the five-year plans.

    Indian Capital Market Understand their concept by Nature Classification Growth and Development
    Indian Capital Market: Understand their concept by Nature, Classification, Growth, and Development! Image credit from #Pixabay.

    The Development of Indian Capital Market:

    Here we detail about the eight developments in the Indian capital market.

    Financial Intermediation:

    The Indian capital market has grown due to the innovation of the mechanism of indirect financing. This innovation has enhanced the efficiency of the flow of funds from ultimate savers to ultimate users through newly established financial intermediaries like UTI, LIC, and GIC. The LIC has been mobilizing the savings of households to build a “life fund”.

    It has been deploying a part of “life fund” to purchase the shares and debentures of the companies. Until 1991 UTI was amongst the top ten shareholders in one out of every three companies listed in the Stock Exchange in which it had a shareholding. Likewise, UTI has been mobilizing savings of households through the sale of “units” to invest in securities of “blue-chip” companies.

    In short, financial intermediaries like LIC, UTI, and GIC have activated the growth process of the Indian capital market. It is evident from the rising intermediation ratio. The intermediation ratio is a ratio of the volume of financial instruments issued by the financial institutions, i.e., secondary securities to the volume of primary securities issued by non-financial corporate firms rose from 0.27 during 1951-56 to 0.37 during 1979-80 to 1981-82.

    Underwriting of Securities:

    The New Issue Market as a segment of the capital market can be activated through institutional arrangements for the underwriting of new issues of securities. During the pre-independence period, the volume of securities underwritten was quite minimal due to lack of an adequate institutional arrangement for the provision of underwriting. Stockbrokers and banks used to perform this function.

    In recent years, the volume and amount of securities underwritten have tremendously increased owing to the increasing participation of specialized financial institutions like LIC and UTI and the developed banks like 1FC1,1CICI and IDBI in underwriting activities. It is evident from the fact that the number of securities underwritten was only 55 percent in 1960-61, whereas at present it is about 99 percent.

    Response to the Offer of Public Issues of Shares and Bonds:

    Traditionally investors in India being risk-investors had been reluctant to invest in shares of public limited companies. Hence, industrial securities as a form of investment were not popular in India before 1951. However, since 1991 public response to corporate securities has been improving. But equity-cult has yet to be developed in rural areas.

    It is important to point out that the public response to new issues of shares and bonds depends upon number of factors such as rates of return on industrial securities relative to rates of return on non-marketable financial assets and real assets, government’s monetary policy and fiscal policy and above all legal protection to investors in recent years.

    All the above-mentioned factors have contributed to the growth of public response to the new issue of corporate securities. In short, growing response to public issues has strengthened the Indian capital market. It is evident from the fact that the number of shareholders rose from 60 lakh in 1985 to 160 lakh in 1994.

    Merchant Banking:

    The role of merchant banking in India’s capital market can be traced back to 1969 when Grind lays Bank established a special cell called the “Merchant Banking”. Since then all the commercial banks have set up the “Merchant Banking Division” to play an important role in the capital market. The merchant banking division of commercial banks advises the companies about economic viability, financial viability and technical feasibility of the project.

    They conduct the initial ‘spade work” to find out the investment climate to advise the company whether the public issue floated would be fully subscribed or under-subscribed. The merchant banks in India act as the underwriter as well as the manager of new issues of securities. The Securities and Exchange Board of India (SEBI) regulates all merchant banks as far as their operations relating to issue activity are concerned. To sum up, the emergence of merchant banking has strengthened the institutional base of the Indian capital market.

    Credit Rating Agencies:

    Of late, credit rating agencies have emerged in the financial sectors. This is an important development for the growth of the Indian capital market. Investment Information and Credit Rating Agency of India (ICRA) rates bonds, debentures, preference shares, Corporate Debentures, and Commercial Papers.

    As Credit Rating Information Services of India Ltd. (CRISIL) is a pioneer in credit rating, it rates debt instruments of banks, financial institutions, and corporate firms. The credit assessment of companies issuing securities helps in the growth of New Issue Market segment of the capital market.

    Mutual Funds:

    Mutual funds companies are investment trust companies. Mutual funds schemes are designed to mobilize funds from individuals and institutional investors, who in exchange get units which Can be redeemed after a certain lock-in period, at their Net Asset Value (NAV). The mutual fund schemes provide tax benefits and buyback facility. The Unit Trust of India (UTI) can be regarded as the pioneer in the setting up of mutual funds in India. Of late, commercial banks have also launched in India mutual funds schemes.

    Can-stock scheme of the Canara bank and LIC’s scheme, such as Dhanashree, Dhanaraksha, and Dhanariddhi are mutual funds schemes. Since mutual funds schemes help to mobilize small savings of the relatively smaller savers to invest in industrial securities, so these schemes contribute to the growth of the capital market. The total assets of mutual funds companies increased from Rs. 66,272 crore in 1993-94 to Rs. 99,248 crore in 2005 and to Rs. 4,13,365 crore in 2008. The investment of mutual funds in the secondary market influences the share prices in the stock exchange.

    Stock Exchange Regulation Act:

    The growth of capital market would not have been possible had the Government of India not legislated suitable laws to protect the investors and regulate the Stock Exchanges. Under this Act, only recognized stock exchanges are allowed to function. This Act has empowered the Government of India to inquire into the affairs of a Stock Exchange and regulate it’s working. into the affairs of a Stock Exchange and regulate it’s working.

    The Government of India established the Securities and Exchange Board of India (SEBI) on April 12, 1988, through an through an extraordinary notification in the Gazette of India. In April 1992, SEBI was granted statutory recognition by passing an Act. Since 1991, SEBI has been evolving and implementing various measures and practices to infuse greater transparency in the capital market in the interest of investing public and orderly development of the securities market.

    Liberalization Measures:

    Foreign Institutional Investors (FII) have been allowed access to the Indian capital market. Investment norms for NRIs have been liberalized, so that NRIs and Overseas Corporate Bodies can buy shares and debentures, without prior permission of RBI. This was expected to internationalize the Indian capital market.

    To sum up, the Indian capital market has registered an impressive growth since 1951. However, it is only since the mid-1980s that new institutions, new financial instruments, and new regularity measures have led to speedy growth of the capital market. The liberalization measures under the New Economic Policy (NEP) gave a further boost to the growth of the Indian capital market.

  • How to Analysis of Capitalism in India?

    How to Analysis of Capitalism in India?

    What is Capitalism? In the capitalist economic system, all farms, factories and other means of production are the property of private individuals and firms. In the words of Loucks, “Capitalism is a system of economic organization featured by private ownership and use for private profit of man-made and nature-made capital”. So, what is the question we are going to discuss; How to Analysis of Capitalism in India?

    Here are explained; Capitalism in India: first Features, Growth, Process, and finally Social.

    Definition; According to Wright, “Capitalism is a system in which, on average, much of the greater portion of economic life and particularly of net new investment is carried on by private (i.e. non-government) units under conditions of active and substantially free competition and avowedly at the least, under the incentive of hope for profit”.

    The Features of Capitalism:

    In the broadest sense, capitalism may be defined as the economic system making the widest use of capital in the process of production. In the technical sense, capitalism may be defined as the economic system of production in which capital goods are owned privately by individuals or corporations.

    The principal features of capitalism are discussed below; key points.

    • Private Property.
    • Profit Motive.
    • Price Mechanism.
    • Role of the State.
    • Market Economy.
    • Consumer Sovereignty.
    • Freedom of Enterprise.
    • Large Scale Production, and.
    • Competition.

    The following are the economic bases of capitalism, now explain each below:

    Private Property:

    Capitalism thrives on the institution of private property. It means that the owner of a firm or factory or mine may use it in any manner he likes. He may hire it to anybody, sell it, or lease it at will in accordance with the prevalent laws of the country. The state’s role is confined to the protection of the institution of private property through laws.” The institution of private property induces its owner to work hard, to organize his business efficiently and to produce more, thereby benefiting not only himself but also the community at large. All this is actuated by the profit motive.

    Profit Motive:

    The main motive behind the working of the capitalist system is the profit motive. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive. The profit motive is synonymous with the desire for personal gain. It is this attitude of acquisitiveness which lies behind individual initiative and enterprise in a capitalist economy.

    Price Mechanism:

    Under capitalism, the price mechanism operates automatically without any direction and control by the central authorities. It is the profit motive which determines production. Profit being the difference between outlay and receipt, the size of profit depends upon prices. The larger the difference between prices and costs, the higher is the profit. Again, the higher the prices, the greater are the efforts of the producers to produce the varied quantities and types of products. It is the consumers’ choices which determine what to produce, how much to produce, and how to produce. Thus capitalism is a system of mutual exchanges where the price-profit mechanism plays a crucial role.

    Role of the State:

    During the 19th century, the role of the state was confined to the maintenance of law and order, protection from external aggression, and provision for educational and public health facilities. This policy of laissez-faire—of non-intervention in economic affairs by the state—has been abandoned in capitalist economies of the West after the Second World War. Now the state has important tasks to fulfill. They are monetary and fiscal measures to maintain aggregate demand; anti-monopoly measures and nationalized monopoly corporations; and measures for the satisfaction of communal wants such as public health, public parks, roads, bridges, museums, zoos, education, flood control, etc.

    Market Economy:

    Under capitalism, there is no governmental control over the forces of production, distribution, and exchange. It is controlled by the forces operating in the market. There is no price control or regulated distribution by the government. The economy operates freely under the law of demand and supply. The capitalist economy is a liberalized or market economy.

    Consumer’s Sovereignty:

    Under capitalism, ‘the consumer is the king.’ It means freedom of choice by consumers. The consumers are free to buy any number of goods they want. Producers try to produce a variety of goods to meet the tastes and preferences of consumers. This also implies freedom of production whereby producers are at liberty to produce a vast variety of commodities in order to satisfy the consumer who acts like a ‘king’ in making a choice out of them with his given money income. These twin freedoms of consumption and production are essential for the smooth functioning of the capitalist system.

    Freedom of Enterprise:

    Freedom of enterprise means that there is the free choice of occupation for an entrepreneur, a capitalist, and a laborer. But this freedom is subject to their ability and training, legal restrictions, and existing market conditions. Subject to these limitations, an entrepreneur is free to set up any industry, a capitalist can invest his capital in any industry or trade he likes, and a person is free to choose any occupation he prefers. It is on account of the presence of this important feature of freedom of enterprise that a capitalist economy is also called a free enterprise economy.

    Large Scale Production:

    It is another important feature of capitalism. Capitalism arose as a result of the industrial revolution which made large-scale production possible. The installation of gigantic plants and division of labor increased production. More production means wider use of capital and led to more profits.

    Competition:

    Competition is one of the most important features of a capitalist economy. It implies the existence of a large number of buyers and sellers in the market who are motivated by self-interest but cannot influence market decisions by their individual actions. It is competition among buyers and sellers that determine the production, consumption, and distribution of goods and services. There being sufficient price flexibility under capitalism, prices adjust themselves to changes in demand, in production techniques, and in the supply of factors of production. Changes in prices, in turn, bring adjustments in production, factor demand, and individual incomes.

    How to the Growth of Capitalism in India?

    In primitive societies the usual system of exchanging goods vas barter system. At that time the idea of profit did not exist, ‘people accumulated goods not for making a profit during the days of scarcity but to gain prestige. The system of trading often consisted if giving and mutual rendering of services. Economic factors such as wages, investment; interest and profit were practically unknown preliterate societies. During the early Middle Ages, trade and commerce were little more advanced than they had been among the primitive peoples.

    While at first conducted largely on a barter basis, trading came gradually more and more to involve money as a medium of exchange. This gave a fillip to the development of trade and commerce which gave importance to money, gold, silver, and tokens thereof. Money is not property, it is a symbol of property; it has a profound influence on the uses to which productive properties are put. According to Simmel, the establishment of the institution of money in the economic system of modern western society has had far-reaching effects upon almost every phase of life.

    It resulted in greater freedom for both the employer and employee and for both the seller and buyer of goods and services since it makes for the depersonalized relationship between the two parties in a transaction. Simmel maintains that the institution of money has radically changed our whole philosophy of life. It has made us pecuniary in our attitudes so that everything is evaluated in terms of money, and as social contacts have become depersonalized, human relations have become superficial and cold.

    In the early part of the modern period, the economic activities were generally regulated by the governing powers. It was an economic reflection of the growing unification of European peoples under strong monarchical Governments. The interest of the secular rulers lay in internal unification and this necessarily meant economic as well as political integration. The mercantilist ideology dominated the period. The economic activities of the people were politically regulated to increase the profits of the king and to fill his treasury with wealth.

    The nation was looked upon by the mercantilist as an economic organization engaged in the making of profit. The ownership and use of productive properties were minutely regulated by mercantilist’s law. Then came the Industrial Revolution which changed the techniques of production. The policy of mercantilism also had failed to bring about the welfare of the people. To secure maximum production of usual goods the new do “trine of ‘Laissez-faire’ was propounded.

    The doctrine preached non- interference in economic matters. According to this doctrine, if individuals pursue their own interest, unhampered by restriction; they will achieve the greatest happiness of the greatest number. Its advocates, Adam Smith, J.S. Mill, Spencer, and Sumner contended that Government should remove all legal restrictions on trade, on production, on the exchange of wealth and on the accumulation of property.

    Adam Smith enunciated four principles:
    • The doctrine of self-interest.
    • Laissez-faire policy.
    • The theory of competition, and.
    • Profit motive.

    Upon these principles and in response to the changing techniques of production brought about by the Industrial Revolution, a new system of property ownership and ‘production’, capitalism developed. The Industrial Revolution replaced factories in place of households. In factories, the work was divided up into little pieces, each worker doing a little piece. Production increased. Large plants in -course of time were set.

    Corporations owning large plants came into being. All these developments of mass production, the division of labor, specialization, and exchange were accompanied by capitalism. In this new system of production and exchange, the ownership of productive properties was both individualized and divested of all social responsibility.

    The Property became private and was freed from all obligations to the state, church, family and other institutions. The owners of the factory were free to do as they pleased. Profit was the main motive for them. They were under no obligation to produce goods if they believed that they could not make the profit. The mode of production was profit-oriented and the Governments in adherence to the doctrine of Laissez-faire supported the owners in this right.

    How to understand Capitalism as a Process?

    With the growth of the capitalist system there was:

    • Extreme polarization of classes.
    • Pauperization.
    • Alienation.
    • Dehumanization of Labor.
    • The dictatorship of the proletariat, and.
    • Shift from Capitalism to Socialism.

    Marx’s sociology of capital in capitalist societies is not applicable to so many capitalist societies. This is the” case particularly with the Asiatic societies which do not show any class conflict in-spite of social stratification.

    In the words of Raymond Aron,

    “For one thing the Marxist conception of capitalist society and of society, in general, is sociological but this sociology is related to philosophy, and a number of interpretative difficulties arise from the relation of philosophy to sociology.”

    Hence Marx’s predictions about the downfall of capitalism have not come true everywhere. His idea of constant pauperization of Labour is wrong so far as Western societies are concerned. Neither is there any proof of Proletaization. The claim of the destruction of capitalism is inevitable is far from being scientific.

    How to Analysis of Capitalism in India
    How to Analysis of Capitalism in India? Old Two Rupees Coin, Image credit from #Pixabay.

    What do the Social Consequences of Capitalism?

    Capitalism or economic development has brought in some good consequences which are as follows:

    • Economic Progress: Capitalism has led men to exploit the natural resources more and more. The people exert themselves utmost for earning money. This had led to many inventions in the field of industry, agriculture, and business which have contributed to economic progress.
    • Exchange of Culture: Capitalism has led to international trade and exchange of know-how. People in different countries have come nearer to each other. The development of the means of transport and communication has facilitated contacts among the peoples of the world thereby leading to exchange of ideas and culture.
    • High Standard of Living: Capitalism is the product of industrialization. Industrialization has increased production. Now men do not have to toil for bread as they used to do in the primitive days. The necessities of life are easily available.
    • The progress of Civilization: Capitalism was instrumental in inventing new machines and increasing the production of material goods. Man is to-day more civilized than his ancestors.
    • Lessening of Racial Differences: Capitalism has also led to the lessening of differences based on race, creed, caste, and nationality. In the factory, the workers and officials belonging to different castes co-operate with one another and work shoulder to shoulder. Inter-mixing of castes is the off-shoot of capitalism.

    But in spite of the above good consequences capitalism has proved a curse instead of a blessing.

    Its bad effects are the following:
    • Imbalance in Social System: Capitalism has led to an imbalance in the social system. It has failed to adjust itself to the welfare of society. It has widened the gap between the haves and have-not’s and created insatiable greed for wealth among the people. It has changed the very outlook of human beings. Wealth has become an important criterion of status.
    • Artificiality: Capitalism has transformed modern culture into mere artificiality. Today there is a false courtesy. One does not find gentility and human touch. One can see false prestige, mere artificiality, and sheer advertisement even in art and literature, nothing to speak of diet, dress, and speech etc. Life today has become artificial.
    • Greed for Wealth: Capitalism is based on greed for wealth It has raised wealth to the pedestal of deity. Wealth has become the be-all and end-all of human life. The modern man is mad after wealth. He wants to earn more and more wealth by any means. The idea for morality does not enter into the means of earning. It has thus led to moral degeneration.
    • Destruction of Human Values: In a capitalist order, everything has come to be measured in terms of wealth. All values of human life such as love, sympathy, benevolence, love, and affection are evaluated in terms of silver coins. Every person wants to get the maximum. The sole criterion is wealth, not value.
    • Materialism: Capitalism manifests materialism in its extreme form. Religion and spirituality lose their force. Religion becomes the opium of people. Religion becomes hypocrisy. The big capitalists save lacs of rupees by way of tax through contribution to fictitious charitable institutions. While people are short of goods, the capitalists hoard them to soar the prices.
    • Emphasis on Sex: Capitalist culture lays emphasis on sex. Marriage has become a mere agreement for the satisfaction of sex hunger. The capitalists advertise their goods through the display of sex instincts. Literature and movies are based on sexual passion. Pre-marital and extra-marital sexual relations are on the increase. Man is lacking in self-control.

    It has led to the moral degeneration of man. Obviously, capitalism has failed to bring about the moral development of man. It is injurious both to society and the individual. In short, it has proved a curse to humanity instead of a blessing. Karl Marx was its bitter critic.

  • Asian Top Countries Ranked by Military Power (2016)

    Asian Top Countries Ranked by Military Power (2016)

    This is a list of countries by Military Strength Index based on the GFP database Asia Pacific report. The factors under consideration for military strength and their total weights are a number of active personnel in the army, tanks, attack helicopters, aircraft, aircraft carriers, and submarines. The Military Strength Indicator introduced by GFP database includes only the strongest militaries and does not account for the actual training that the militaries may have.

    The Asia Pacific region is embroiled in a full-fledged arms race with new programs being funded and alliances being forged. The GFP ranking makes use of over 40 factors to determine each nation’s Power Index score.

    There are is the total of 33 countries of the Asia Pacific region represented by the GFP database.

    Asia

    1.  0.0964 – Russia
    2.  0.0988 – China
    3.  0.1661 – India
    4.  0.2466 – Japan
    5.  0.2623 – Turkey
    6.  0.2824 – South Korea
    7.  0.3246 – Pakistan
    8.  0.3354 – Indonesia
    9.  0.3684 – Vietnam
    10.  0.3958 – Taiwan

    Military Countries Power (2016) All rating by GFP Power Index rating

    Military Power (2016) By GFP rank other countries list; 11. 0.4068 – Thailand, 12. 0.4209 – Australia, 13. 0.4442 – North Korea, 14. 0.6584 – Myanmar, 15. 0.6679 – Malaysia, 16. 0.8384 – Uzbekistan, 17. 0.8661 – Philippines, 18. 0.8683 – Bangladesh, 19. 0.8722 – Kazakhstan, 20. 0.9349 – Azerbaijan, 21. 1.0241 – Singapore, 22. 1.0611 – Afghanistan, 23. 1.5148 – Georgia, 24. 1.6268 – Sri Lanka, 25. 1.6722 – Turkmenistan, 26. 1.7981 – Mongolia, 27. 1.8224 – Cambodia, 28. 1.9113 – Armenia, 29. 1.9741 – Nepal, 30. 2.0791 – New Zealand, 31. 2.3158 – Kyrgyzstan, 32. 2.4322 – Tajikistan, and 33 2.8947 – Laos.

    Note: Global Firepower (GFP) continues to provide its unique analytical display of data concerning modern military powers. Over 125 powers are considered in the ranking which allows for a broad spectrum of comparisons to be achieved concerning relative military strengths.

     

  • Top Countries for Military Expenditure

    Top Countries for Military Expenditure

    Discover the top countries for military expenditure and their strategic objectives. Explore the defense budgets and military capabilities of nations around the world. Military expenditure is a significant indicator of a country’s military strength and strategic priorities.

    Top Countries for Military Expenditure

    Here are some of the top countries based on their military expenditure, along with insights on their strategic objectives and defense budgets:

    United States

    The United States consistently ranks as the country with the highest military expenditure. With a defense budget that far exceeds that of any other nation, the U.S. allocates a significant portion of its budget to funding its military. This includes maintaining a large and technologically advanced armed forces, ensuring global presence with numerous military bases worldwide, and continuous investments in cutting-edge defense technology. The U.S. also invests heavily in nuclear capabilities, missile defense systems, and cyber defense.

    China

    China’s military spending has seen a rapid increase over the past few decades, reflective of its growing economic power and strategic ambitions. China’s defense expenditure supports its goal of modernizing its military forces, including the development of stealth aircraft, naval expansion featuring aircraft carriers, and advancements in missile technology. The People’s Liberation Army (PLA) is also focusing on cyber warfare and space capabilities as part of its comprehensive strategy to fortify its regional and global military position.

    India

    India’s military expenditure is driven by its strategic challenges, including border tensions with neighboring countries like Pakistan and China. The defense budget aims to modernize its armed forces, procure new weapons systems, and enhance its naval and air capabilities. India also focuses on indigenous defense manufacturing under initiatives like “Make in India,” aimed at reducing dependency on foreign arms imports. Counter-terrorism and internal security measures also consume a significant portion of its defense budget.

    Russia

    Russia maintains a high level of military spending to ensure it remains a global military power. The country’s defense budget supports extensive modernization programs for its military. Including the development of advanced missile systems, nuclear capabilities, and electronic warfare tools. Russia’s military doctrine emphasizes strategic deterrence and maintaining a robust response capability to any external threats. Military engagements in Syria and Ukraine also reflect its strategy of asserting influence and protecting national interests.

    Saudi Arabia

    Saudi Arabia’s military expenditure is among the highest in the world. Primarily influenced by regional security concerns, including the conflict in Yemen and tensions with Iran. The kingdom’s defense budget funds a well-equipped military with advanced weaponry, much of which is imported from the United States and Europe. Additionally, Saudi Arabia is investing in developing its domestic defense industry to enhance its self-reliance in defense production.

    United Kingdom

    The United Kingdom allocates significant resources to defense to ensure it remains a key player in global security. The UK’s defense budget supports its commitments to NATO, including nuclear deterrence through its Trident submarine fleet. It also invests in maintaining a strong conventional military force, with capabilities spanning land, sea, and air. Recent defense strategies also emphasize cyber defense, space capabilities, and addressing emerging threats.

    Germany

    Germany has increased its military spending in recent years to meet NATO’s defense spending targets and address new security challenges in Europe. The German defense budget includes significant investments in modernizing its armed forces, enhancing rapid deployment capabilities, and participating in multinational defense initiatives within the EU and NATO frameworks. Germany is also focusing on improving its cyber defense and intelligence capabilities.

    Japan

    Japan’s military expenditure aligns with its post-World War II pacifist constitution, focusing primarily on self-defense and regional security. However, recent years have seen Japan gradually expanding its defense capabilities in response to regional threats. Including North Korea’s missile programs and China’s growing military presence in the East China Sea. Japan invests heavily in missile defense systems, maritime security, and advanced technology for its Self-Defense Forces.

    South Korea

    South Korea invests heavily in its military due to the ongoing threat from North Korea. The defense budget includes funding for advanced weapon systems, missile defense, and cyber capabilities. South Korea is also increasing its investments in indigenous defense manufacturing to reduce reliance on foreign arms. The country’s military strategy focuses on deterrence, rapid response capabilities, and maintaining a technological edge over potential adversaries.

    France

    France maintains high military spending to support its global military commitments and its role as a key NATO member and EU security actor. The French defense budget funds a range of capabilities, including nuclear deterrence, counter-terrorism operations, and peacekeeping missions. France also invests in modernizing its armed forces, developing cyber defense capabilities, and maintaining a strong presence in international defense collaborations.

    The data on military expenditure can vary based on sources and methods of calculation. But these countries consistently feature among the top spenders in terms of defense budgets. Their substantial investments reflect a combination of strategic priorities, geopolitical challenges, and commitments to maintaining regional and global security.

    Military Expenditure Comparison: Side-By-Side

    Below is a comparison of some of the top countries based on their military expenditure. Highlighting their strategic objectives and defense budgets:

    CountryMilitary ObjectivesDefense Spending
    United StatesGlobal presence, technological advancement, nuclear capabilities, cyber defenseHighest in the world, extensive budget
    ChinaModernization, regional dominance, naval expansion, cyber warfare, space capabilitiesRapid increase, substantial budget
    IndiaBorder security, modernization, indigenous defense manufacturing, counter-terrorismSignificant budget, growing investment
    RussiaStrategic deterrence, modernization, electronic warfare, regional influenceHigh level, extensive modernization
    Saudi ArabiaRegional security, advanced weaponry, domestic defense industryAmong highest, large imports
    United KingdomNATO commitments, nuclear deterrence, conventional and emerging threatsSignificant investment, comprehensive
    GermanyNATO defense targets, rapid deployment, EU initiatives, cyber defenseIncreased spending, modernization focus
    JapanSelf-defense, regional security, missile defense systems, maritime securityGrowing investment, technology-driven
    South KoreaDeterrence, rapid response, advanced weapon systems, indigenous defense manufacturingHigh expenditure, technological edge
    FranceGlobal commitments, NATO member, nuclear deterrence, cyber defense, peacekeepingConsistent investment, modernization

    Their substantial investments reflect a combination of strategic priorities, geopolitical challenges, and commitments to maintaining regional and global security.