,.,.
DEFENCE BUDGET 2024
In FY 23-24, the total national budget layout is Rs 14.4 trillion whereas defence budget is set at Rs 1.8 trillion (USD 6.3 billion) which accounts for only 12.5% of the budget, making it the lowest % allocation of defence budget in the history of Pakistan.
This means that total national budget layout has increased by 53.6% in comparison to previous year but in stark contrast the defence budget has decreased by over 3% in comparison to previous year.
In previous FY 22-23, the total national budget layout was Rs 9.5 trillion, whereas defence budget was Rs 1.5 trillion (USD 7.1 billion) which accounted for 15.7% of the budget.
Army’s share in defence budget in the previous FY 22-23 was 7.6 % of the national budget. This too has been considerably reduced in this FY 23-24 to just 5.69% (Rs 824 billion) of the national budget.
The constant decrease in defence budget since FY 21-22 is also clearly visible from historical data attached in chart 1.
Therefore few newspapers simply reporting in isolation that last year the defence budget was 1.5 trillion and this year it is increased by 15% to 1.8 trillion is misleading.
Pakistan’s defence budget as percentage of GDP has also been consistently reducing since 80’s from 5.5% of GDP to its historical lowest ever value yet, 1.7 % of GDP in FY 2023-24. This aspect is graphically highlighted in Chart 2 alongwith comparison with India.
According to SIPRI countries spending more on defence in comparison to Pakistan include Oman (12% of GDP) Lebanon (10.5%), Saudi Arabia (8%), Kuwait (7.1%), Algeria (6.7%), Iraq (5.8%), UAE (5.6%), Azerbaijan (4%), Turkey (2.77%), Morocco (5.3%), Israel (5.2%), Jordan (4.9%), Armenia (4.8%), Mali (4.5%), Qatar (4.4%), Russia (3.9%), US (3.4%) and India (3.1%).
Now we will see how, due to the effect of inflation, the defence budget will suffer a devaluation of Rs 594 Billion.
According to moodys economist the inflation in Pakistan is likely to rise to at least 33% in the first quarter. This will result in a deprecation effect of is Rs 594 Billion.
Now if we subtract the depreciation effect the overall value of defence budget will reduce from Rs 1.8 Trillion to Rs 1.2 trillion only.
In terms of US dollars our defence budget of 6.3 billion USD will be devalued to 4.1 billion USD.
Just to put in perspective the defense budget of India is 72.6 Billion USD, which will make it approximately 18 times more than that of Pakistan!!