Thaindian News

Islamabad, June 4 (IANS) Pakistan increased its defence allocation to Rs.495 billion in a total budget of Rs.2,504 billion (around $30 billion) for 2011-12, but Prime Minister Yousuf Raza Gilani admitted revival of the economy was the key concern for his government.

The defence outlay for the next fiscal is Rs.53 billion more than the Rs.442 million earmarked last year, the daily Dawn reported citing budget documents.

“We live in a difficult neighbourhood. We are faced with threats to our security…We are the victims of war on terrorism,” Finance Minister Abdul Hafeez Shaikh said in his budget speech Friday.

According to the Stockholm International Peace Research Institute’s database of military expenditure, after this increase Pakistan would rank among the top 30 spenders on defence worldwide.

The media report said that the military expenses overshot the allocation by about Rs.25 billion during the current financial year.

The military had apparently sought an allocation of over Rs.500 billion, but the government could not meet the demand due to financial crunch.

The Dawn said that the budgetary details on defence spending were scant and broadly categorised under heads like employee expenses (Rs.206.5 billion), operating expenditures (Rs.128.3 billion), physical assets (Rs.117.6 billion) and civil works (Rs.42.6 billion).

Gilani, however, said that revival of the economy was the key concern of his government.

“We have earmarked Rs.730 billion for the Public Sector Development Programme (PSDP), including provincial allocations. This development expenditure will indeed trigger a multiplier effect on the entire economy,” Associated Press of Pakistan quoted Gilani as saying.

Addressing the special cabinet meeting to discuss and approve budgetary proposals for the year 2011-12, Gilani said there was no room for complacency.

Gilani said Pakistan was entering into the new financial year after tremendous fiscal stress in the current financial year as the economy was devastated by unprecedented floods causing damages to the tune of Rs.800 billion as per independent estimates.

The prime minister said deteriorating security situation imposed further costs on the economy in the shape of increased security spending and re-settlement of internally displaced persons, reported APP.

The daily Dawn in an editorial noted that Pakistan was now among the slowest growing South Asian countries.

The editorial Saturday said: “The outgoing fiscal was yet another year of uphill economic struggle for the vast majority of Pakistanis due to decelerating growth and rising prices. Investment dried up, unemployment escalated and poverty increased.”

“Ranked as the third-fastest expanding Asian economy after China and India in the middle of the last decade, Pakistan is now among the slowest growing South Asian countries,” the Dawn said.

“India, Sri Lanka and Bangladesh are forging ahead.”

The daily said that the country’s economy is expected to expand by 2.4 percent this year while the region is projected to grow by 8.7 percent and the world’s developing nations by 6.5 percent.

“Even many African economies have out-performed us in recent years”, says the Economic Survey for 2010-11 released Thursday.

“Deteriorating security conditions, flood losses, rising global oil prices, stalled external capital flows and delays in fiscal and tax reforms are the main culprits that have slowed growth and strained the government’s resources, leading to a huge build-up in domestic and foreign public debt for financing the budget.”