The Ministry of Defence has sought Rs 920 billion - an 18 percent higher amount than the current year's budget of Rs 781 billion. The rise in demand is linked to threat perception as well as the envisaged enhanced role of the armed forces in providing security to the ongoing projects of China Pakistan Economic Corridor. The defence ministry has reportedly requested that the budgetary allocations of the armed forces should be linked to threat perception which has enhanced due to the current geo-political situation and Pakistan's strategic location in the area.
The government increased defence spending by 11.6 percent in 2015-16 relative to the year before - or in absolute terms to Rs 780 billion from Rs 700 billion in 2014-15. And reports indicate that the government is considering allocating Rs 860 billion for defence in the forthcoming fiscal year. The increase in military spending has been proposed against the backdrop of renewed tensions with India, which is the largest military spender in the region with a defence budget of $40 billion and is one of the world's biggest arms importers in its quest to build up its military might.
While talking to Business Recorder, Defence Production Minister Rana Tanveer Hussain confirmed that defence budget of Rs 860 billion is being proposed by the Ministry of Finance for next fiscal year. "The government will allocate the required funds for defence as security is the top priority of present government," he said. The Minister added that defence production budget is going to be separate from the budget of the Ministry of Defence. The reason, he explained, is because much time is wasted in moving files between the two ministries and the separation in budgets will hopefully happen in the next budget.
The Defence Production has proposed Rs 621 million for year 2016-17 in contrast to the revised estimates of Rs 906 million in the current year, implying thereby a reduction in allocation of Rs 190 million in the next fiscal year. The defence ministry has sought $8 billion for the next 5-8 years to develop Federally Administered Tribal Areas (FATA). During a recent meeting of Pak-US Strategic Dialogue, Pakistan proposed establishing a border management fund of $100 million. According to Pakistan government sources, the US government agreed that a robust border management is essential for maintenance of peace on the Pak-Afghan border and further negotiations on the matter are likely to continue.
The Ministry has requested that sales tax and customs duties on defence imports should be waived off and that powers to waive off austerity measures of defence organisations should be given to the secretary defence and not secretary finance. The Ministry has also sought a preferential treatment in pensions and said that there should be one rank-one pension formula for the defence services.