The federal government has approved an outlay of Rs 495.215 billion for annual defence affairs and services for 2011-12, registering an increase of 12 percent or Rs 50 billion in absolute terms. However, with inflation rate at 14.1 percent the defence budget has witnessed a decline in real terms.
The budgetary allocation for defence for 2010-11 was Rs 442.173 billion however the ongoing military operations in South Waziristan and other parts of the country led to the revised defence budget of Rs 444.640 billion. The defence budget does not include armed forces retired employees pension as this is included in the employees related expenses, which witnessed an increase of Rs 29 billion - from Rs 176.726 billion to Rs 206.488 billion.
On the operational side, the government increased allocation for defence by Rs 17 billion - from Rs 111.327 billion to Rs 128.283 billion. India increased its defence spending by about 11.6 percent in February, aimed at strategic threat posed by China's rapidly expanding offensive military capabilities. However Pakistan has traditionally tried to match its own military expenditure to India's.