ISLAMABAD: Increase in defence spending during the next fiscal year would be in a single digit, the lowest in decades — 9.4 per cent to be precise — when compared to the expenditure incurred during the outgoing financial year.

Finance Minister Ishaq Dar, while presenting the budget in the National Assembly on Friday, said that an amount of Rs920 billion was proposed to be allocated for defence services for 2017-18 against the revised allocation of Rs841bn for the outgoing year 2016-17.

The growth looks even smaller when the proposed allocation is compared with Rs860bn originally allocated for 2016-17, a shade lesser than 7pc in that case. The Rs21bn difference, between the original and revised allocations for 2016-17, shows that the cuts on defence spending actually began to be applied during the outgoing year. Normally, the revised allocations in defence budgets over the years have been on the higher side.

The defence budget has been growing consistently over the past six years by around 11pc per annum except for 2013-14, the first year of the current government, when it was spiked up by 15pc. The reduction in the growth rate of the defence budget was much in line with the declining trend in government’s expenditures, which are proposed to increase by 5.4pc this year as compared to a raise of 9.39pc during the outgoing year.

Dissecting the allocation for defence services reveals that the major thrust has been on capping the operating expenditures of defence services. The ‘operating expenditures’ head, which covers things like transportation, fuel costs (POL), ration, medical treatment, training and other common use items, would grow by a meagre 1.8pc to Rs225bn from Rs221bn in 2016-17. The other heads of defence budget namely employees-related expenditures, physical assets and civil works are all set to increase by around 12pc.

Soldiers and officers would get a special 10pc ‘Zarb-i-Azb allowance’ in addition to the 10pc raise announced in the budget. It is one reason why the employees-related expenses are proposed to grow by 12.5pc.

The apparent lesser growth in defence budget notwithstanding, its share in terms of total outlay of the budget marginally grew by a little less than 1pc and in terms of percentage of GDP it would be going up from 2.6 to 2.9pc.

Furthermore, the defence allocation does not give a complete picture about how much the government is actually spending on armed forces. The allocation does not include Rs180bn pension bill of retired soldiers and an unknown amount spent on the nuclear programme and development of missiles. Another Rs90bn-Rs100bn per annum have over the years been spent on security operations under a separate allocation. It is proposed that the amount to be earmarked for security and related aspects be made 3pc of the Gross Divisible Pool, but the matter is still being debated at the Council of Common Interests. Major acquisitions are also not included in defence budget.

A comparison of the increase in spending between the three services shows that Pakistan Army, which as always gets the lion’s share, would hike its spending by 9.8pc, whereas Pakistan Air Force would spend 8.3pc more and Pakistan Navy 8.9pc more.

Published in Dawn, May 27th, 2017

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