The global defence budget forms a very important aspect of a country's spending and its whole mechanism. We observe an increasing trend in the global defence budget. This paper aims to examine this trend, the reasons for the same and deeply analyse the impact on the economy, society and the environment of a country. Data extracted from the World Bank database for three countries - the US, India and Nepal have been used to understand the economic impact of these trends by performing simple linear regression analysis, taking military expenditure as the independent variable and Gross Domestic Product (GDP) as the dependent variable. The paper also elucidates the issue of terrorism and the dominance of the developing countries in the arms race leading to unwanted social impacts on various government sectors, crowding out their allocation of resources. In conclusion, the paper talks about the negative aspect of the rising global defence budget and some policy suggestions such as peace economy to serve as alternatives because a war not only brings atrocities but the aftereffect of destruction is unbearable.