ISLAMABAD: The government on Friday proposed an allocation of Rs1.523 trillion for defence services for the fiscal year 2022-23 — an increase of 11.16 per cent over the initial allocation for the outgoing year (2021-22), according to the budget documents tabled in the National Assembly.

The allocation makes up nearly 1.94pc of the GDP and 16pc of the total expenditure planned by the government for the next year.

The hike is almost at par with the average inflation calculated for the year ending on June 30.

A defence source had last week claimed that the defence spending in the next year would be increased by 6pc to Rs1.45tr. Similarly, the text of Finance Minister Miftah Ismail’s budget speech, shared along with budget documents, said Rs1.45tr had been earmarked for defence. This discrepancy revealed the absence of clarity in the government over increasing defence expenditure while people were bearing the brunt of severe financial crisis.

The declared increase in defence budget was in sharp contrast to the cuts in spending on development sector (11pc), health (31pc), education (1.5pc) and housing (77pc).

It should be recalled that the stated figure of defence expenses never gives full picture. For instance, the government would in the next fiscal year be paying an additional amount of Rs395 million to retired military personnel as pensions — up from Rs360m last year.

There are other expenditures in the defence sector that are not fully disclosed like the expenses incurred on import of military hardware and running of the nuclear programme.

Many, therefore, believe that the actual spending is much higher than what is shared in the National Assembly.

Budget documents further showed the revision made in the defence allocation for the outgoing year. Initially Rs1.37tr had been allocated when the budget was announced last year.

However, as we draw closer to the end of the financial year, the armed forces had overspent Rs110 billion — an increase of 8pc from the initial allocation. The revised defence budget figure for the outgoing year is now Rs1.48tr.

Breakdown of the allocation reveals that Army, as always, got the biggest slice of the cake (47.6pc or Rs724.3bn), followed by Pakistan Air Force (21.3pc or Rs323.7bn), defence establishment — the inter-services organisations (20.33pc or Rs309.6bn), and Pakistan Navy (10.85pc or Rs165.3bn). All services got an equal raise of 11.16pc in their share over the outgoing year.

A functional itemization of the proposed allocation reveals that the biggest raise has been made in the employees-related expenses covering the salaries and allowances of servicemen, which have gone up by 17.8pc to Rs567.4bn, followed by 12.77pc hike in operating expenditures, which pertain to money spent on transport, ration, training and treatment. The operating expenses grew to Rs368.9bn.

Physical assets and civil works heads grew by 5pc and 3pc, respectively. The civil works head caters for the military infrastructure development and repairs, while the physical assets head is about local purchases of arms and ammunition and some imports and the related costs. An amount of Rs411bn is proposed to be spent on physical assets, while civil works are expected to consume RsRs175.4bn.

It appears that the raise is driven by increase in pay, inflation, rising fuel prices, and depreciation of rupee.

A military source said that armed forces will ensure that the military capabilities remain unaffected despite the financial challenges facing the country. The armed forces, he said, remain committed to ensuring national defence and security with the available resources.

The source further said that the armed forces did not demand any additional funds in the budget this year.

He said the armed forces had worked out their plans to cut expenditures by limiting the expenses on utility bills, fuel, and training. “No official transport will be used on Friday except for emergencies,” he added.

Similarly, he maintained that no new defence-related projects have been included in the PSDP and that the allocation of Rs2,200m is for the ongoing projects.

Published in Dawn, June 11th, 2022

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