Defence budget in a tough economic scenario

The defence budget has traditionally been a major component of Pakistan’s national budget and for FY2022-23 it was no exception. It constituted 2.1% of the country’s gross domestic product and is an 11% increase over the original 1.37 trillion-rupee budget of last year.

The increase was meant to offset the inflation which is 12%, a 10-year high. For armed forces the government made an exception as generally it overlooked inflation while allocating funds to other government agencies. From the data published in the press, the defence budget represents about 16% of the total government outlay for the year. Rupees 667.5 billion were employee related expenses, salaries, travel, etc and Rs411 billion and Rs368.9 billion for physical assets and operating expenses, an increase of 6% and 4% over the revised expenditure. Although the allocation to the three services was not mentioned, unofficial sources that have appeared in the press indicate the following: Army — Rs724 billion, 47% of the total; PAF — Rs323.7 billion, 21% of the total; and Navy — Rs165.3 billion, 11% of the total. Armed Forces Development programme also distributes between Rs50 and Rs80 billion. Considering the state of the national economy and removal of subsidies on energy and fuel for meeting IMF conditionalities, defence spending will remain very tight whereas the security situation is fairly disturbing. Given the Indian unabated hostility toward Pakistan and Modi’s obduracy over the Kashmir issue, chances of any rapprochement are feeble, at least in the near future. At present, no engagement is taking place between the two countries and the hostility is likely to persist, although the coalition government in Pakistan has shown its willingness to get back to the negotiating table. PM Modi has gone to the extent of preventing Pakistan’s participation in China-hosted ‘Dialogue on Global Development’. The intent is that keeping Pakistan military deployed and in a state of alert would further drain its national economy. While Pakistan’s leadership remains engaged in serious internal problems — political, economic and strategic — and the world is focused on the Ukraine-Russia war, Modi expects to further tighten Indian security forces grip on Kashmir.

Whereas Afghanistan’s Taliban government is better disposed toward Pakistan but the hostile activities of TTP, BLA, IS-K mostly operating from Afghanistan are a cause for serious security concern. The Taliban leadership’s close links with TTP have prevented it from taking firm action against them and skirmishes of our border forces with hostile elements operating from Afghanistan on the Western front are a common feature. Deploying sufficient forces and border fencing along the Pak-Afghan border and construction of many forts and security posts has contributed to improving security. But these measures have increased recurring expenses as well. Of late TTP has stepped up its hostile activity but Pakistan Army is taking appropriate steps to counter their designs. Economic development of Balochistan and of former tribal belt at a faster pace is critical for the prosperity of its people, having remained neglected over the years. It will also contribute to improving the security situation. The offer of Iran to build natural gas infrastructure could not materialise due to the objections and threat of US sanctions. The reality however is that due to strained relations between India and Pakistan, economic sanctions on Iran, security situation in Afghanistan, disturbance in Balochistan and in parts of erstwhile FATA, Pakistan’s economy remains adversely affected.

The security of Chinese citizens and that of CPEC is also the responsibility of Pakistan Army. Its expenditure is not debited to the defence budget, but forms part of the national outlay. Pakistan offers the shortest and potentially the most cost-effective conduit to trade between Middle Eastern countries and China, between Africa and China, and between Afghanistan and the world. But for geo-economic and geo-strategic potential to be exploited, the country needs peace within and peace in Afghanistan as well as good relations with India and a peaceful border with Iran. Moreover, the differential between the Indian and Pakistan’s economy has been increasing and Pakistan is unable to maintain the desired force ratio and relies heavily on nuclear deterrence to compensate for the differential.

A combination of rising inflation, steep decline in foreign currency reserves and mounting debt is a serious challenge that Pakistan is facing and is likely to continue in the years ahead. Successive governments have failed to address these, and future too does not seem to be different unless a more holistic approach is taken to address our problems. Foremost, the government cannot continue to relegate human resource development. High priority should be accorded to education and health sectors. An informed and educated citizenry and content population will not only boost the economy but also contribute significantly to defending the state. Educated citizenry promotes stability, supports good governance and is more prone to rejecting hostile elements that are working against the state. Even the intelligence input is of a higher quality in an educated environment. An educated population’s contribution to raising a country’s GDP is significant. As the national education level improves, it has an impact on the quality of exports and widens production base. It is therefore not surprising that Pakistan is lagging behind in IT and high-end manufacturing that are knowledge-based. On January 14, 2022, the previous PTI government in conjunction with the military leadership devised a comprehensive approach to security. It provided strategic guidance in critical areas and is an overarching document for various sectorial policies and had the full support of the military leadership.

The objective of projecting the potential of Pakistan is to highlight what could be achieved and contrast it with where we stand. It is indeed a sad commentary on our present and past leadership that they have failed to place Pakistan on a path of prosperity and to benefit from the enormous advantage of geography and the resilience of its people. But Pakistan’s economy is unlikely to get better if its extremely self-destructive politics continues. And unfortunately, there is no effort or signs that it is going to improve.

Published in The Express Tribune, June 29^th, 2022.

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