BUDGET 2026-27: Defence gets Rs3tr amid security concerns

• Increase comes amid tensions with India, Afghan border concerns
• Allocation crosses 2pc of GDP after 17.6pc hike
• Military spending makes up nearly 16pc of federal outlay
• Rs967.55bn earmarked for salaries, allowances
• Military pensions budgeted separately at Rs822bn

ISLAMABAD: The federal government on Friday proposed allocating Rs3 trillion for defence services in fiscal year 2026-27, marking a 17.65 per cent increase over the outgoing year’s original allocation of Rs2.55tr, as it sought to sustain military preparedness amid continuing tensions with India, a deteriorating security situation along the Afghan border and persistent militant violence at home.

Finance Minister Muhammad Aurangzeb, while tabling the budget in the National Assembly, said Pakistan’s armed forces had delivered a decisive response to India’s aggression, forcing the adversary to retreat and demonstrating the country’s military preparedness and professional competence.

The finance minister attributed the country’s enhanced global stature to the successes of the military.

The proposed allocation, unveiled in the federal budget, comes a year after the government approved an over 20pc increase in military spending. The hike reflects the continuing priority being accorded to defence and security in an increasingly challenging regional environment.

At Rs3tr, the defence allocation would account for about 2.08pc of the country’s projected gross domestic product of Rs143.6tr and nearly 16pc of the total federal outlay of Rs18.77tr, taking military spending back above the 2pc-of-GDP mark after remaining slightly below that level for several years.

Budget documents show that the outgoing year’s original defence allocation of Rs2.55tr was later revised upward to Rs2.58tr, continuing the longstanding pattern of actual military expenditure exceeding initial budget estimates.

The latest increase, though lower than last year’s roughly 20pc rise, remains significantly above the average annual growth in defence spending recorded over the preceding five years.

The increase comes against the backdrop of Pakistan’s military confrontation with India last year, continuing counterterrorism operations and growing concerns over militant safe havens across the border with Afghanistan.

A functional breakdown of the proposed allocation shows employee-related expenses remain the largest component of defence spending.

An amount of Rs967.55bn has been earmarked for salaries and allowances of serving military personnel and civilian employees, representing a 14.36pc increase over last year’s allocation of Rs846.03bn. The category accounts for 32.25pc of the total defence budget.

Operating expenses, covering fuel, transportation, rations, training, medical treatment and other day-to-day requirements, are projected to increase by 5.54pc to Rs743.46bn from Rs704.4bn in the outgoing year and would consume nearly one-fourth of the overall allocation.

The sharpest increase has been proposed under the physical assets head, which finances procurement of arms, ammunition, military equipment and related acquisitions.

Allocation under this category is set to rise by 39.62pc to Rs925.83bn from Rs663.08bn in the current fiscal year, accounting for almost 31pc of the defence budget.

The sizeable increase suggests renewed emphasis on force modernisation and equipment acquisition following a period in which personnel and operational costs had absorbed a growing share of military expenditure.

Major military imports and acquisitions are usually in addition to the allocation made under this head and are not disclosed.

Spending on civil works, which includes maintenance of military infrastructure and construction of new facilities, is projected to increase by 7.92pc to Rs363.16bn from Rs336.49bn.

Military pensions are budgeted separately and are not included in the defence services allocation. The government has earmarked Rs822bn for pensions of retired military personnel under the federal pension head.

An additional Rs10.9bn has been allocated for defence administration compared to an original allocation of Rs7.9bn in the outgoing fiscal year, which was later revised upward to Rs11.75bn.

As in previous years, the published budget does not disclose expenditure on Pakistan’s nuclear weapons programme, which is believed to be financed through separate classified allocations.

According to the latest estimates by the International Campaign to Abolish Nuclear Weapons, Pakistan spent about $1.5bn on its nuclear programme in 2025, equivalent to roughly Rs418bn at current exchange rates, although no official figure is publicly available.

The increase in defence spending comes despite continuing fiscal pressures.

Inflation averaged 7.5pc during the outgoing fiscal year and is projected at 8.2pc in 2026-27, while the government remains engaged in efforts to maintain fiscal discipline under its economic stabilisation programme.

Therefore, the proposed allocation reflects the difficult choice the government faced while balancing economic constraints with security imperatives. Even as pressure persisted for greater spending on development and social sectors, the government appears to have concluded that the prevailing security environment warrants continued growth in defence expenditure.

By comparison, Rs1tr has been allocated for development projects, including Rs25.1bn for healthcare under federal government-run institutions and Rs46bn for higher education.

Published in Dawn, June 13th, 2026