Demystifying the defence budget — I

A document called the ‘green book’ gives details in the section on defence. However, some demands are still left out.

After the presentation of the federal budget earlier this month, the media reported an allocation of Rs495.2 billion for defence. When it came to approving demands for grants and appropriations by the National Assembly last week, the media reported a higher allocation of Rs505.7 billion, without explaining the addition of Rs10.7 billion. In varying degrees, the defence budget is a mystery the world over. What budget-makers say is never to be taken on face value. The total amount has to be estimated by aggregating the demands for grants and appropriations given in the budget in accordance with an accepted definition. Some serious investigation is also required to estimate allocations believed to be disguised. The Stockholm International Peace Research Institute provides a generally accepted definition of defence expenditure, which has been followed here to the extent possible.

The amount of Rs495.2 is the official quick reference figure of the defence budget. The defence budget is classified as defence affairs and services, which includes the demands of the defence administration and defence services. Budget documents such as the “Annual Budget Statement” and the “Budget in Brief” contain this limited view. The defence budget goes up to Rs505.7 billion with the addition of the demands of airport security forces, meteorology, surveys of Pakistan, federal government educational institutions in cantonments and garrisons and the development expenditure of the Defence Division. A new document called the ‘green book’ gives out these details in the section on ministry of defence. Conceptually, however, some important demands are still left out. In the first place, the demands and the development expenditure of the Defence Production Division add another Rs2 billion. Secondly, military pensions amounting to Rs73.2 billion, shown as part of the demand of superannuation allowances and pensions since 2000, also belong here. Third, there is the allocation of an estimated Rs1.1 billion for the recurrent budget and seven development projects of defence-controlled universities. All these allocations add up to a neat sum of Rs582 billion.

Contingent liabilities refer to guarantees given by the government. A news story carried by this paper on June 5 revealed that an allocation of Rs150 billion shown in the “Budget in Brief” document as a grant to be made under contingent liabilities is to be used, among other things, for an armed services development programme. If this, in fact, is the case, then the total defence budget will be that much larger. There is no way of knowing exactly how much will be spent on the nuclear programme and intelligence agencies.

But let us stick to the figure of Rs582 billion, based as it is on clearly identified heads of expenditure. How much of a burden it is depends on the size of a set of ratios. First, this amount is 21 per cent of the federal government’s total budget for 2011-12. Second, the allocation would consume 29.8 per cent of the tax revenue. Third, the defence budget is estimated as 2.8 per cent of GDP. These values have to be contextualised to see the extent of the burden. A common practice is to compare the defence budget with the expenditure on the social sector. It is understood that a lower expenditure on defence will release resources for social sector. However, the Eighteenth Amendment to the constitution has changed that. The social sector is almost entirely the responsibility of the provinces and the money released by defence will most likely be utilised on other subjects in the federal domain.

Published in The Express Tribune, June 24^th, 2011.