Despite assumptions of annual increases, Pakistan's defense budget has been decreasing since the 1990s, currently at its lowest allocation in history, highlighting efficient resource management amidst economic constraints.

June is significant in Pakistan as it is when the budget is presented. As soon as the budget date is set, various questions arise in people's minds, with the defense budget being the most debated topic. Many assumptions about the defense budget surface on media platforms, which often have no basis in reality. When examined in light of assumptions and facts, the truth behind these assumptions becomes clear.
Does defense budget increase every year? General perception is yes, but the fact is ‘no’, it doesn’t. According to Stockholm International Peace Research Institute (SIPRI), a consistent decrement has been observed in Pakistan’s defense budget since 1990s. For Fiscal Year (FY) 2023-24, the defense budget was set at 12.47 percent of the total PKR 14.46 trillion budget. For FY 2024-25, this allocation decreased to 11.23 percent of the PKR 18.877 trillion budget, amounting to PKR 2,122 billion, that is lowest in history.
According to the Global Firepower Index, India ranks as the fourth best military in the world, while Pakistan is ninth. The index evaluates over 60 factors, including gross domestic product (GDP), population, military strength, purchasing power, and others, to determine a country's capability in conventional warfare. Despite reduced spending, Pakistan's military remains effective and ranks among the top 10 most powerful armies globally, showcasing efficient resource management amidst economic constraints.
Despite the decrease, Pakistan requires a substantial defense budget to address multiple security threats. These include a persistent threat from its eastern neighbor, cross-border militancy from Afghanistan, internal militancy from the Tehreek-i-Taliban Pakistan (TTP), and the insurgency in Balochistan. Securing its borders with Iran to combat drug and weapons trafficking, and militant movements is also critical. Additionally, protecting Chinese investments under the China-Pakistan Economic Corridor (CPEC) is vital to maintain its strategic relationship with China amidst recurring attacks on Chinese nationals and projects. 

Ninety percent of this budget goes towards obligatory payments, while the military manages its own welfare, including that of the families of martyrs and the welfare of its personnel. Over the past five years, there has been no increase in Pakistan's defense budget; in fact, in 2019, it was reduced by over USD 3 billion to support national economic growth. The military's fair and balanced use of the defense budget each year has helped reduce the burden.

According to Stockholm International Peace Research Institute (SIPRI), a consistent decrement has been observed in Pakistan’s defense budget since 1990s. For Fiscal Year (FY) 2023-24, the defense budget was set at 12.47 percent of the total PKR 14.46 trillion budget. For FY 2024-25, this allocation decreased to 11.23 percent of the PKR 18.877 trillion budget, amounting to PKR 2,122 billion, that is lowest in history.

In the last fiscal year, 2022-23, the total national budget was PKR 9.5 trillion, with the defense budget being PKR 1.5 trillion (USD 7.1 billion), which was 15.7 percent of the budget. In the fiscal year 2023-24, the total national budget is PKR 14.47 trillion, while the defense budget is set at PKR 1.8 trillion (USD 6.3 billion), which is only 12.47 percent of the budget, marking the lowest defense budget allocation in Pakistan's history. This means the total national budget increased by 53.6 percent compared to the previous year, but conversely, the defense budget decreased by more than 3 percent.
In the last fiscal year, 2022-23, the defense budget's share for the military was 7.6 percent of the national budget. This has been significantly reduced to only 5.69 percent (PKR 824 billion) of the national budget for the fiscal year 2023-24. This estimate for defense services also includes salaries and allowances for both uniformed and civilian employees. Administrative expenses include transportation, petroleum, oil, rations, medical treatment, training, etc., and the import and related purchases of weapons, ammunition, and civil works.
When compared with other countries, Pakistan's armed forces are evidently tackling the toughest challenges of border security, anti-terrorism operations, and internal and external security with limited resources. Despite all financial, economic, and security challenges, the defense budget has been continuously cut, making it significantly lower than that of any other major military force in the world.
The economic contribution of the defense sector is substantial, with army personnel constituting 9.6 percent of registered income taxpayers while consisting only 0.2 percent of the population. Annually, the defense sector returns PKR 412 billion to the national exchequer through various channels. This includes PKR 311.4 billion in taxes, demonstrating a significant fiscal input. Additionally, the sector allocates PKR 43.3 billion to health and PKR 43 billion to education, underlining its role in supporting public services. Moreover, PKR 15.8 billion is contributed by civilians working under Ministry of Defense (MOD).

Fauji Foundation and Welfare Organizations Running Businesses
The nation's assets are the martyrs, veterans, and retired officers and soldiers of the Pakistan Army. The Pakistan Army's welfare regime is a significant contributor to the well-being of the families of martyrs (Shuhada). A major portion of military resources is dedicated to supporting the wards of those who have sacrificed their lives for the country. In addition to government benefits, the Pakistan Army ensures that each Shaheed's family receives substantial financial support, amounting to at least PKR 18-20 million. This comprehensive support system underscores the Army's commitment to honoring the sacrifices of its personnel and providing for their families.
The Pakistan Armed Forces have a comprehensive welfare and care system, with the Fauji Foundation playing a crucial role, as do hospitals, schools, and more. Additionally, the system provides substantial and respectful support to veterans and retired personnel, similar to systems in many armed forces worldwide.
During the fiscal year 2022-2023, the Pakistan Army contributed approximately PKR 100 billion in indirect taxes and duties to the national treasury. The army's welfare and subsidiary institutions collectively deposited around 260 billion rupees in taxes and duties. The breakdown includes the Fauji Foundation Group, which contributed approximately PKR 223 billion; the Army Welfare Trust, about PKR 3 billion, Defense Housing Authority (DHA) around PKR 23 billion; and the National Logistics Cell (NLC), approximately PKR 3.5 billion, along with other institutions.
Analyzing these figures, the Pakistan Army and its affiliated institutions collectively contributed about 360 billion rupees in taxes and duties to the national treasury during 2022-2023.
It is important to clarify that no public rupee is spent on DHA, Fauji Foundation, and welfare organizations. There is often a misconception that these institutions use government money, which is entirely incorrect. In fact, these institutions contribute hundreds of billions in taxes to the national treasury annually. They generate their own revenue. Moreover, the services provided by the Pakistan Armed Forces and their managed institutions, such as security, hospitals, colleges, and schools, are invaluable. Quality housing through DHA, high-standard healthcare through CMH, employment for millions, and the welfare of retired personnel and martyrs' families, which would otherwise be the direct responsibility of the Government of Pakistan.

Despite the decrease, Pakistan requires a substantial defense budget to address multiple security threats. These include a persistent threat from its eastern neighbor, cross-border militancy from Afghanistan, internal militancy from the Tehreek-i-Taliban Pakistan (TTP), and the insurgency in Balochistan.

Additionally, the Pakistan Armed Forces contribute to building roads and infrastructure in remote and challenging areas, protecting government and private projects, aiding in agriculture, and assisting in extracting mineral resources. These contributions significantly stabilize the economy, making any propaganda against them highly regrettable.

When compared with other countries, Pakistan's armed forces are evidently tackling the toughest challenges of border security, anti-terrorism operations, and internal and external security with limited resources.

It's also important to note that civilians benefit from and work in army-managed institutions. A few active-duty military personnel work in these organizations. Ironically, those who criticize these institutions often prefer to live in DHA and receive treatment at CMH.
Welfare organizations managed by the Pakistan Army are not unique in the world; every country establishes such institutions for its military. It's important to note that the businesses run by these organizations do not receive any tax exemptions. Moreover, the combined budget of Pakistan's three armed forces amounts to only 11.23 percent of the total national budget. 
Defense Budget 2024-2025: Myth Vs. Reality
▪    Myth 1. Many believe the defense budget consumes the majority of Pakistan’s total expenditures. 
▪   Fact. In reality, it constitutes only 11.23 percent of the national budget, with 88.77 percent allocated to non-defense sectors, according to the Fiscal Year 2024-2025.
▪   Myth 2. There’s a perception that the Pakistan Army receives the largest share of the defense budget.
▪   Fact. Contrary to this, for the fiscal year 2024-25, out of total defense budget of PKR 2122 billion, the budget distribution is as follows: 47.50 percent for the Pakistan Army, 21.30 percent for the Pakistan Air Force, 10.80 percent for the Pakistan Navy, and 20.30 percent for inter-services organizations. 
▪   Myth 3. There’s a misconception that Pakistan’s defense budget has been steadily rising.
▪   Fact. However, historical data shows a decrease: from 6.50 percent of GDP in the 70s to 2.86 percent in 2020-21, marking a downward trend in percentage terms over the decades.
▪   Myth 4. Some believe Pakistan has an unusually large military force.
▪   Fact. Contrarily, at least 64 other countries have more military personnel per capita than Pakistan, highlighting a lower density of military personnel compared to these nations.
▪   Myth 5. There’s a belief that Pakistan spends excessively on its military per capita. 
▪   Fact. In reality, Pakistan’s military expenditures per capita are among the lowest globally, with expenditures significantly lower compared to countries like Israel, Saudi Arabia, and the U.S.
▪   Myth 6. It's often claimed that the military’s commercial ventures burden the economy. 
▪   Fact. However, entities like Fauji Fertilizer and Fauji Cement contribute significantly to the national economy through substantial tax payments, contrary to being a financial burden.
▪   Fact. Pakistan allocates 1.7 percent of its GDP to defense, which exceeds the global average of 2.18 percent, reflecting a prioritization in defense spending relative to other nations.
▪  Fact. Pakistan maintains the sixth largest armed forces globally in terms of personnel but spends the lowest per soldier among comparable countries, including the U.S., Saudi Arabia, and India, highlighting efficient resource utilization within the military sector. The U.S. spends USD 392,000 per soldier, Saudi Arabia USD 371,000, India USD 42,000, Iran USD 23,000, and Pakistan USD 13,400 per soldier.
In the global context, Pakistan's defense spending of USD 6.15 billion is modest when compared to other nations. China spends a substantial USD 236 billion. Iran's defense expenditure is USD 30 billion while archrival India spend USD 75 billion. These figures illustrate that Pakistan's defense budget is relatively low, reflecting its limited resources compared to other countries with significantly higher military expenditures.

In conclusion, the analysis of Pakistan's defense budget dispels several misconceptions and highlights crucial realities. Despite widespread assumptions, the defense budget constitutes a modest 11.23 percent of the national budget for Fiscal Year 2024-2025, with the majority of funds directed towards non-defense sectors. Contrary to beliefs of increasing military spending, historical data shows a consistent decrease in defense expenditure as a percentage of GDP over the decades. Pakistan maintains a strategically lean military force per capita compared to global peers, emphasizing efficient resource allocation within its armed forces.
Moreover, military-managed institutions such as the Fauji Foundation significantly contribute to the national economy through substantial tax payments, challenging perceptions of their economic burden. These institutions play a pivotal role in supporting the welfare of veterans and martyrs' families, underscoring the military's commitment beyond defense operations.

The economic contribution of the defense sector is substantial, with army personnel constituting 9.6 percent of registered income taxpayers while consisting only 0.2 percent of the population. Annually, the defense sector returns PKR 412 billion to the national exchequer through various channels.

Amid ongoing security challenges, including threats from neighboring countries, internal militancy, and safeguarding vital economic projects like CPEC, Pakistan's defense budget remains crucial for maintaining national security and stability. As the country pursues Azm-e-Istehkam to combat extremism and terrorism, effective resource management and genuine efforts are imperative for achieving lasting peace.
In essence, understanding the realities of Pakistan's defense budget is essential for informed discourse and policy decisions, ensuring the country's security needs are met while fostering sustainable economic growth and social development.