These costs have not been budgeted for. Equally obviously, there will be no stinting of funds so far as defence is concerned. There is also the probability that the current fighting will lead to a reassessment of the country's defence needs. Under these circumstances, the finance ministry needs to be clear about the effect which this expenditure is going to have on the government's finances, and how the costs are going to be funded. Given the current political situation, there seems to be no alternative to financing the operations by extra borrowing, or by curtailing government expenditure. In the latter case, it will be the government's capital expenditure which will be affected, since there is hardly any scope to reduce outlays on government salaries. But curbing capital expenditure could prove to be a dampener for the incipient economicrecovery, the first green shoots of which are visible. On the other hand, extra borrowing will mean losing control of the fiscal deficit, although it may be argued that, with commodity prices low and a good harvest, inflation is not a worry at present, though interest rates will be affected. Also, since a large part of our defence equipment is acquired from abroad, buying new weapons will mean a larger import bill, which will pressure the rupee, a consequence already being anticipated by the forex markets. The finance ministry needs to put in place a financial strategy to fund the fighting without letting it short-circuit the recovery.