In keeping with Prime Minister Imran Khan’s austerity drive, Pakistan’s defence budget this year, announced Tuesday, is exactly the same as last year – Rs 1.15 trillion or US$ 7.6 billion. But the alarming slide in the rupee to dollar rate and the current inflation rate of 9.41 per cent mean there will be less foreign exchange for imported equipment and less money for domestic expenditure. Will this net decrease impact the defence preparedness of Pakistan? Will the ongoing economic crisis push Pakistan to review its aggressive national security strategy?
In my view, the larger financial problems will finally force Pakistan to seek accommodation with India.
Also read: Pakistan’s economy is in for a lot of pain
For a decade now, Pakistan has been facing economic crisis. According to Prime Minister Imran Khan, the national debt is now at $205 billion. Its foreign exchange reserves are at a record low. Its tax revenue is only $22.7 billion, half of which is used for debt servicing.
The suspension of American aid of $1.3 billion has further aggravated the problem. The $62 billion China-Pakistan Economic Corridor (CPEC) project is the biggest hope for Pakistan, but also its biggest problem as it rapidly adds to the external debt. Being a national security state beholden to its military, Pakistan’s defence budget hovered at about 3 per cent of its GDP and accounted for 21 per cent of annual government expenditure last year.
In the midst of this economic crisis and a week before the 2019-20 budget, there was a surprise development when the Pakistan Army committed itself to a voluntary defence budget cut. Last year, the defence budget had been increased by 20 per cent.
There was extensive coverage of the proposed defence budget cut/freeze in the Indian media. Analysts were unanimous in their views that the Pakistan military is merely putting up a façade to meet the stringent conditions laid down by the World Bank and other donors. And that it will continue to meet its security needs by hiding the real defence expenditure and putting it under other categories.
A national security state
Assuming that 20-25 per cent of Pakistan’s budget is for imports and 75-80 per cent for domestic expense, the net decrease in the defence budget is approximately 11.5-13.25 per cent.
A decrease of 10-15 per cent can be covered by clandestinely making up the deficit by diverting from other categories. But given the state of Pakistan’s economy, it is unlikely. In the short term, the military will tide over the problem by tightening the belt and deferring the payments of imported equipment, which is mostly from China. However, if economic problems persist, in the long run, the defence preparedness to pursue current security aims will be affected.
Pakistan needs to maintain the current levels of defence spending because of its aggressive national security strategy. Else, it can take care of its fundamental security needs with half the current budget. Its nuclear weapons ensure that there can be no existential threat to Pakistan from India.
Problem child in South Asia
India is a status quo power that has militarily refrained from any action to recover its territories occupied by China and Pakistan. It seems it is even willing to settle for the Line of Control and Line of Actual Control as International Boundary in return for lasting peace and economic development.
Afghanistan and Iran are too weak to pose any threat to Pakistan. Pakistan’s security problems are self-created. It seeks the role of a major power in the region and leadership of the Islamic Umma.
Pakistan seeks parity with India and actively confronts it by waging a proxy war in Jammu and Kashmir. The war in Afghanistan is driven by Pakistan’s regional ambition to have a government of choice in Kabul. A politicised military is the driver of Pakistan’s national security strategy.
India’s choice now
The future of Pakistan’s economy hinges on the success of the CPEC. A lot is at stake for China too, both financially and prestige-wise. The CPEC cannot succeed with conflict raging north and south of it.
There are no black and white solutions for disputes between sovereign states. To begin, we can diplomatically pursue the India-China bilateral model and replicate it with Pakistan. India should also reconsider its stand on China’s Belt and Road Initiative. Regional economic cooperation between India, China, Pakistan and Afghanistan can go a long way in promoting peace in the region. Of course, all these hinge on Pakistan reviewing its aggressive strategy in Jammu and Kashmir and Afghanistan.
Let me end with a cautionary note. With reforms and modernisation of our own armed forces at a standstill for the last 20 years due to inadequate defence budget, Pakistan, despite the economic crisis, has adequate military capacity to stalemate us. As a much bigger economy, with a defence budget five times that of Pakistan, we must create an overwhelming edge in key military technologies, which are beyond Pakistan’s economic reach.
Lt Gen H S Panag PVSM, AVSM (R) served in the Indian Army for 40 years. He was GOC in C Northern Command and Central Command. Post retirement, he was Member of Armed Forces Tribunal. Views are personal.