Govt hikes defence budget by 20% to Rs2.55 trillion

Pakistan will raise its defence spending by a sharp 20% in the 2025–26 fiscal year, following last month’s military clash with longtime rival India.

Presenting the budget on Tuesday, Prime Minister Shehbaz Sharif’s government allocated Rs2.55 trillion ($9 billion) for defence, up from Rs2.12 trillion in the current fiscal year.

The new defence budget also includes Rs742 billion ($2.63 billion) for military pensions, taking total defence-related spending to Rs3.29 trillion ($11.67 billion). Of this, Rs704 billion ($2.5 billion) is earmarked for equipment and other physical assets.

The finance bill projects a fiscal deficit of 3.9% of GDP, a notable reduction from the 5.9% target for 2024–25.

The hike in defence spending follows a military victory in its most intense conflict with India in nearly three decades.

“After defeating India in a conventional war, now we have to surpass it in the economic field,” Prime Minister Sharif said in a statement.

The April clash was triggered by a deadly attack tourists in India Illegally Occupied Kashmir that killed 26 people.

The four-day conflict involved aerial dogfights, drone strikes, and heavy artillery exchanges.