The figure of 35% is based on Half the Personnel Strength with better wages, perquisites, facilities etc. (Don't forget up to 400 Acres of Land)
One third of US$ 35 Billion is nearly US$ 12 Billion and not US$ 10 Billion.
The "actual effects" of the Defence spending be it US$ 7 Billion as you stated and nearly $12 Billion as I feel will be known at the end of Pakistan's Financial Year 2010-2011.
Well i don't buy the better wage and facilities thingy, and even if there is, it would be nominal. Indian defence forces have also given raise to their armed forces in last few years, and Pakistan gave a good rise to its defence forces just last year, that also mostly to those who are in the operational areas. For an example, my bro, a Lieutenant with 2+ years service, even though he was in a hard area and was getting extra allowances for that was getting a salary of 14-15K per month, just recently, he started to get a salary of 24-25K per month, but still the basic pay is same, they just added some extra allowances which can be taken back as he moves to some peace time destination. Wanna believe or not, doesn't matters as I said what I know. Plus, rest of the facilities of both armies would nearly be the same.
And i don;t understand the 400 acre (agri) land comment, if you mean the agri land given to officers, well then to clarify it, not all get it, just a few of them get it mostly the generals, which is also not coming from the defence budget, as this is already army allocated land, and by the way the trend is going down due to non-availability of agri land or scarcity of it, thus in few years time, this would be completely gone too.
And as for the after retirement house and residential plot which are given to the officers, plz do note, its not for free nor it comes from the defence budget. Army officers after joining the armed forces give a specific amount from their salaries, its deducted from their salaries and when they retire, the outstanding amount is paid by the officers after which they get the house, thus they pay for it not for free. Same case for the residential plots they get, they keep paying for its installments and even after retirement they keep giving it.
Do note, these things don't come out of the govt defence budget, these things are raised from internal sources as well as some other ways, which i have already told in detail a few times, thus in no mood to repeat them again. But all these after retirement things are not taken from the defence budget. Even after retirement, army officers don't get the whole pension, they get a deducted amount if they are doing some job, thus majority since do indulge in jobs, thus they don't get their full pensions.
Except for last 2 years, i don't recall when the last time defence budget went out of the budgeted amount.
And for the last 2 years, external factors were involved which made them cross the targets, mostly due to the exchange rate factor as in last 2 years the rupee to dollar exchange rate has fallen thus more funds were required, 2nd major thing which let to the imbalance was the salary raise, which was not expected to happen, mid year it was given, which impacted the defence budget. Since no more raise in salaries are expected this year, no major operations taking place, thus the budget of this year would most probably be managed in limit of may be though less chance, breach the limit of sanctioned budget, but not atleast by the figure that you just quoted.
You are giving a 5B US$ excess, which is too much, even during the high time of operations last year, we did not cross that limit.
7-8B US$ is the figure and would hardly cross it.