ISLAMABAD: The government on Friday proposed an allocation of Rs 1.523 trillion to the defense 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 budget documents. introduced in the National Assembly.
This allocation is about 1.94 percent of the GDP and 16 percent of the total expenditure planned by the government for the next year.
This increase is almost equal to the calculated average inflation for the year ending June 30.
A defense source had last week claimed that defense spending would be increased by 6 per cent to Rs 1.45 crore next year. Similarly, the text of Finance Minister Mifta Ismail’s budget speech shared with budget documents states that Rs 1.45 crore was earmarked for defence. This discrepancy revealed the lack of clarity in the government on the increase in defense expenditure, while the people were bearing the brunt of the severe financial crisis.
The increase announced in the defense budget was in sharp contrast to the cut in spending on the development sector (11 pc), health (31 pc), education (1.5 pc) and housing (77 pc).
It should be remembered that the declared figure of defense expenditure never gives a complete picture. For example, the government will pay an additional amount of Rs 395 million as pension to retired military personnel in the next financial year – up from Rs 360 million last year.
There are other expenditures in the defense sector that are not fully disclosed, such as spending on imports of military hardware and running nuclear programs.
Therefore, many believe that the actual expenditure is much higher than the expenditure shared in the National Assembly.
The budget documents showed the revision made in the defense allocation for the year ahead. When the budget was announced last year, initially Rs. 1.37tr was allocated.
However, as we near the end of the fiscal year, the armed forces had spent over Rs 110 billion – an increase of 8 per cent from the initial allocation. The revised defense budget figure for the outgoing year is now 1.48tr.
A breakdown of the allocations shows that the Army, as always, got the biggest piece of cake (47.6 pc or Rs 724.3 billion), followed by Pakistan Air Force (21.3 pc or Rs 323.7 billion), Defense Establishments – Inter-Services organization (20.33 pc or Rs 309.6 billion), and the Pakistan Navy (10.85 pc or Rs 165.3 billion). All services received a corresponding increase of 11.16 per cent in their share over the previous year.
A functional item of the proposed allocation shows that the largest increase has been made in staff-related expenses, which include salaries and allowances of soldiers, rising 17.8 per cent to Rs 567.4 billion, followed by operating expenses by 12.77 per cent. has increased. Which pertains to money spent on transportation, rationing, training and treatment. Operating expenses increased to Rs 368.9 billion.
The heads of physical assets and civil works increased by 5 per cent and 3 per cent, respectively. The Civil Works head caters for the development and repair of military infrastructure, while the physical asset top deals with the local procurement of arms and ammunition and some imports and related costs. Rs 411 billion is proposed to be spent on physical assets, while Rs 175.4 billion is expected to be spent on civil works.
The increase in wages appears to be driven by inflation, rising fuel prices and depreciation of the rupee.
A military source said the armed forces will ensure that the military capability remains unaffected despite the financial challenges facing the country. He said that the Armed Forces are committed to ensure national defense and security with the available resources.
The source further said that the armed forces have not demanded any additional funds in this year’s budget.
He said the armed forces have followed through on their plan to cut spending by limiting spending on utility bills, fuel and training. “No official transport will be used on Friday except in case of emergency,” he said.
Similarly, he said that no new defense-related projects have been included in the PSDP and that an allocation of Rs 2,200 million is for ongoing projects.
Published in Dawn, June 11, 2022