Govt approves 6% hike in defence budget

The government had approved an increase of 6% in defence budget for the outgoing fiscal year.

Rs1.45 trillion budget will meet the needs of the armed forces, including their enhanced salary requirements.

The decision to increase the defence budget by another Rs80 billion was taken by the Economic Coordination Committee (ECC) of the Cabinet that in total approved Rs182 billion in supplementary grants.

The ECC also approved slapping a 10% regulatory duty on the import of petrol from China to curb the misuse of bilateral free trade agreement. Some oil marketing firms rerouted their imports through China to evade 10% customs duties.

The Ministry of Defence had demanded an additional Rs80 billion defence budget for “critical shortfalls” in addition to making adjustments in the budget for spending on the Jinnah Naval base, the Naval Base Turbat and multi-functional office building in the headquarters.

Federal Minister for Finance Miftah Ismail presided over the ECC meeting that approved Rs80 billion supplementary budget for the armed forces or to the extent of the actual additional expenditures being incurred. The finance ministry was of the view that the additional spending in fiscal year 2021-22 ending on June 30 will be less than Rs80 billion.

For the outgoing fiscal year, the National Assembly had last year approved a Rs1.373 trillion defence budget. With the raise in the spending ceiling, the next fiscal year’s defence budget may also now be higher than the earlier estimated figure of over Rs1.55 trillion.

In total, the Ministry of Defence got Rs153 billion or 11.8% additional money in this fiscal year over the revised budget of the previous year, which is equal to the average inflation rate in Pakistan. The defence spending will be equal to 2.2% of the Gross Domestic Product, excluding expenditures on the armed forces development programme.