Impact of trade deficit on defence expenditure.

Defence Expenditure is one of the major areas of expenditure for any country's financial budget, which in turn directly affects the overall economic development of the nation because any nation at war will be spending less for the development in contrast to the defence expenditure. The amount allocated to the defence expenditure is computed after consideration of a lot of constraints. In this paper we have showed that the amount allocated in Defence Expenditure is directly affected by the Trade Deficit of the country. For the purpose of analysis, we have used several techniques such as correlation, linear regression, and cross-validation to show the impact that Trade Deficit has on the Defence Expenditure of India. The data collected for this study was secondary data. This paper further helps to know about which factor of the Trade Deficit, such as Inflation, Foreign Exchange Rate, Forex Reserve & Social Sector Expenditure has the most significant impact on determining the Defence Expenditure of India. [ABSTRACT FROM AUTHOR]