Proposed 20% increase in salaries of Pakistan Army: Where will this money come from?
Proposed 20% increase in salaries of Pakistan Army: Where will this money come from?
Pakistan's Ministry of Defense has written a letter to the Ministry of Finance to increase the salaries of the Armed Forces personnel, asking for a 20% increase in the salaries of the Armed Forces personnel.
At a time when the Corona epidemic is predicting a very difficult period for the country's economy in the coming days, the letter suggested that the salaries of military personnel and officers between 2016 and 2019 should be increased. The temporary increase, ie the ad hoc allowance, should be made a permanent part of the basic salary and after that the salary should be increased by 20%.
Pakistan's armed forces were given ad hoc relief of 10 percent in the 2016, 2017 and 2018 budgets. In the financial year 2019-20, the relief was five percent. In addition, in 2018, Al-Mizan Relief Fund was also given 10 percent. Earlier in 2015, the Armed Forces' ad hoc fund for the last few years was added to the salary and the total salary was increased. After 2015, the basic salary was not increased in any budget but ad hoc relief was given.
The main reason for giving ad hoc relief is that the increase in the basic salary increases the other benefits associated with the salary, including the pension, which puts a burden on the national exchequer.
The letter also estimates an increase in the budget from this increase, which according to the document will be more than Rs 63.69 billion.
It should be noted that a large part of the country's total defense budget is allocated for the salaries and other allowances of military and civilian personnel of the Armed Forces, but the pensions of retired personnel are not part of it.
The Pakistani military's public relations department confirmed the letter, calling it a "normal operation."
An ISPR official told IANS that every year before the budget is presented, the finance ministry seeks suggestions from the Pay Commission. All government ministries and departments send drafts of their recommendations in this regard. These recommendations are discussed before a final decision is made. According to ISPR, the Ministry of Defense has also sent a draft to the Ministry of Finance in this regard.
According to the text of the letter written to the Ministry of Defense after consultation with the three services by the Joint Staff Headquarters, military personnel are facing financial difficulties in their current salaries due to rising inflation in the country. According to the letter, depreciation of the rupee, consumer price index, increase in utility bills and inflation are affecting officials.
The letter further said that in the budget of the current financial year, five per cent ad hoc relief was given to the rank of brigadier ie in grades 17 to 20 and 10 per cent ad hoc relief in grades one to sixteen but in grades twenty one and twenty two. Was not added.
For the first time, then-Prime Minister Nawaz Sharif visited Kargil in February 1999, and this year he announced a major pay rise for soldiers.
It should be noted that last year, the Armed Forces had decided to voluntarily withdraw from the increase in the defense budget due to the economic situation in the country. However, Prime Minister Imran Khan had decided that in case of ad hoc relief, he would increase the allowances of different ranks of the armed forces by five to ten per cent.
According to the letter, due to the increase in the tax slab, the officers whose salaries were increased ad hoc also had to pay more tax than before and thus technically 'their salaries have been reduced'.
In the past, the salaries of members of the armed forces have been increased on two occasions. For the first time, then-Prime Minister Nawaz Sharif visited Kargil in February 1999 and this year announced a major pay rise for soldiers.
Then in 2010 the PPP government increased the salaries of the armed forces by 100%. The then Army Chief General Ashfaq Parvez Kayani had argued that despite the large-scale military operations against terrorism in the country, the salaries of the personnel were very low.
A comparative report was also presented at the time, according to which the salaries of Pakistan's armed forces personnel were lower than other forces in the region, including Bangladesh.
A senior finance ministry official, speaking on condition of anonymity, told that it was usually at the discretion of the ministry to increase the salaries of employees of any agency, department or ministry. Will increase
"In particular, the increase in the salaries of civil servants is based on a number of other factors, and the same is true for employees of the armed forces."
"Sometimes it is possible for an institution to bring its problems to our notice through its ministry, but it is up to the finance ministry to decide," he said. The Ministry of Finance develops various proposals and options in this regard, including comments on the budget of any kind of increase and its impact on the national treasury. It is also stated that the increase will affect another sector or No, and whether this pressure can be met in the event of revenue coming from another source.
According to him, these proposals are presented in the cabinet meeting on the same day before the budget document is presented in the National Assembly where the cabinet, chaired by the prime minister, selects or rejects any of them. After which it is made part of the budget speech at the last minute.
According to another Finance Ministry official, in the last four years, instead of increasing the basic pay of the Armed Forces, they have been given ad hoc relief which can be terminated at any time.
According to him, although the armed forces are also under the federal government, a separate summary of their salaries and other benefits and allowances is prepared and several allowances such as operational areas or hard areas allowances (areas where military operations are being conducted) There are others that are not available to other federal employees.
Where will this money come from?
It may be recalled that the demand for salary hike by the Pakistan Army came at a time when the International Monetary Fund (IMF) had forecast Pakistan in April 2019 that the country's economy would shrink by 1.5 per cent during the current financial year. Last year, it saw an increase of 3.3 percent.
In addition to the IMF, the World Bank has also forecast a 1.3 percent decline in the country's economic growth rate.
Meanwhile, the SBP in its policy statement on agriculture has expressed concern that the corona virus will hit the economic sectors. In addition, the central bank has recently cut the policy rate by a total of 4.25% twice a month. Earlier, the International Monetary Fund and the World Bank had also expressed concern over the slowdown in Pakistan's economic growth due to the corona virus and the consequent cessation of business activities. According to these agencies, the growth rate of the Pakistani economy is likely to be negative 0.5% due to the lockdown as compared to 3.3% growth rate last year.
If that happens, it is likely to have a devastating effect on the country's overall economic situation, along with rising unemployment, poverty and hunger.
In Pakistan, the bulk of the budget is spent on development projects in addition to debt repayment and defense.
Dr Ashfaq Hassan, a former adviser to the finance ministry and an economist, told that the finance ministry usually spends 2.5 per cent of its GDP on defense each year.
It should be noted that according to the Stockholm International Peace Research Institute and the World Bank, the rate of defense budget in Pakistan was between 3 to 4 percent of GDP between 2015 and 18. There was a time when the defense budget was seven percent of the country's GDP, but as it entered the 21st century, it declined sharply.
According to Dr Ashfaq Hassan, despite the difficult economic situation, this time the government will be under pressure from all sectors to increase salaries, mainly due to "rising inflation under the current government."
"Borrowing on IMF terms has pushed up inflation in the country to such an extent that all government employees, whether they are part of the armed forces or not, have been severely affected," he said. After the increase that is being sought now, the total effect will be 20% and I think the salaries of all other government employees will increase by the same amount.
However, he said, "Such losses are offset by revenue, but this time businesses are closing due to the corona virus, so there is no expectation of much increase."
It may be recalled that the Corona epidemic in Pakistan has severely affected the country's economy and Hafeez Sheikh, Advisor to the Prime Minister on Finance, said last Friday that the fiscal deficit would remain at nine per cent of GDP in the current financial year. It is feared that the tax collection target will not be met and this target will be reduced by about 20%.
Pakistan's Ministry of Defense has written a letter to the Ministry of Finance to increase the salaries of the Armed Forces personnel, asking for a 20% increase in the salaries of the Armed Forces personnel.
At a time when the Corona epidemic is predicting a very difficult period for the country's economy in the coming days, the letter suggested that the salaries of military personnel and officers between 2016 and 2019 should be increased. The temporary increase, ie the ad hoc allowance, should be made a permanent part of the basic salary and after that the salary should be increased by 20%.
Pakistan's armed forces were given ad hoc relief of 10 percent in the 2016, 2017 and 2018 budgets. In the financial year 2019-20, the relief was five percent. In addition, in 2018, Al-Mizan Relief Fund was also given 10 percent. Earlier in 2015, the Armed Forces' ad hoc fund for the last few years was added to the salary and the total salary was increased. After 2015, the basic salary was not increased in any budget but ad hoc relief was given.
The main reason for giving ad hoc relief is that the increase in the basic salary increases the other benefits associated with the salary, including the pension, which puts a burden on the national exchequer.
The letter also estimates an increase in the budget from this increase, which according to the document will be more than Rs 63.69 billion.
It should be noted that a large part of the country's total defense budget is allocated for the salaries and other allowances of military and civilian personnel of the Armed Forces, but the pensions of retired personnel are not part of it.
The Pakistani military's public relations department confirmed the letter, calling it a "normal operation."
An ISPR official told IANS that every year before the budget is presented, the finance ministry seeks suggestions from the Pay Commission. All government ministries and departments send drafts of their recommendations in this regard. These recommendations are discussed before a final decision is made. According to ISPR, the Ministry of Defense has also sent a draft to the Ministry of Finance in this regard.
According to the text of the letter written to the Ministry of Defense after consultation with the three services by the Joint Staff Headquarters, military personnel are facing financial difficulties in their current salaries due to rising inflation in the country. According to the letter, depreciation of the rupee, consumer price index, increase in utility bills and inflation are affecting officials.
The letter further said that in the budget of the current financial year, five per cent ad hoc relief was given to the rank of brigadier ie in grades 17 to 20 and 10 per cent ad hoc relief in grades one to sixteen but in grades twenty one and twenty two. Was not added.
For the first time, then-Prime Minister Nawaz Sharif visited Kargil in February 1999, and this year he announced a major pay rise for soldiers.
It should be noted that last year, the Armed Forces had decided to voluntarily withdraw from the increase in the defense budget due to the economic situation in the country. However, Prime Minister Imran Khan had decided that in case of ad hoc relief, he would increase the allowances of different ranks of the armed forces by five to ten per cent.
According to the letter, due to the increase in the tax slab, the officers whose salaries were increased ad hoc also had to pay more tax than before and thus technically 'their salaries have been reduced'.
In the past, the salaries of members of the armed forces have been increased on two occasions. For the first time, then-Prime Minister Nawaz Sharif visited Kargil in February 1999 and this year announced a major pay rise for soldiers.
Then in 2010 the PPP government increased the salaries of the armed forces by 100%. The then Army Chief General Ashfaq Parvez Kayani had argued that despite the large-scale military operations against terrorism in the country, the salaries of the personnel were very low.
A comparative report was also presented at the time, according to which the salaries of Pakistan's armed forces personnel were lower than other forces in the region, including Bangladesh.
A senior finance ministry official, speaking on condition of anonymity, told that it was usually at the discretion of the ministry to increase the salaries of employees of any agency, department or ministry. Will increase
"In particular, the increase in the salaries of civil servants is based on a number of other factors, and the same is true for employees of the armed forces."
"Sometimes it is possible for an institution to bring its problems to our notice through its ministry, but it is up to the finance ministry to decide," he said. The Ministry of Finance develops various proposals and options in this regard, including comments on the budget of any kind of increase and its impact on the national treasury. It is also stated that the increase will affect another sector or No, and whether this pressure can be met in the event of revenue coming from another source.
According to him, these proposals are presented in the cabinet meeting on the same day before the budget document is presented in the National Assembly where the cabinet, chaired by the prime minister, selects or rejects any of them. After which it is made part of the budget speech at the last minute.
According to another Finance Ministry official, in the last four years, instead of increasing the basic pay of the Armed Forces, they have been given ad hoc relief which can be terminated at any time.
According to him, although the armed forces are also under the federal government, a separate summary of their salaries and other benefits and allowances is prepared and several allowances such as operational areas or hard areas allowances (areas where military operations are being conducted) There are others that are not available to other federal employees.
Where will this money come from?
It may be recalled that the demand for salary hike by the Pakistan Army came at a time when the International Monetary Fund (IMF) had forecast Pakistan in April 2019 that the country's economy would shrink by 1.5 per cent during the current financial year. Last year, it saw an increase of 3.3 percent.
In addition to the IMF, the World Bank has also forecast a 1.3 percent decline in the country's economic growth rate.
Meanwhile, the SBP in its policy statement on agriculture has expressed concern that the corona virus will hit the economic sectors. In addition, the central bank has recently cut the policy rate by a total of 4.25% twice a month. Earlier, the International Monetary Fund and the World Bank had also expressed concern over the slowdown in Pakistan's economic growth due to the corona virus and the consequent cessation of business activities. According to these agencies, the growth rate of the Pakistani economy is likely to be negative 0.5% due to the lockdown as compared to 3.3% growth rate last year.
If that happens, it is likely to have a devastating effect on the country's overall economic situation, along with rising unemployment, poverty and hunger.
In Pakistan, the bulk of the budget is spent on development projects in addition to debt repayment and defense.
Dr Ashfaq Hassan, a former adviser to the finance ministry and an economist, told that the finance ministry usually spends 2.5 per cent of its GDP on defense each year.
It should be noted that according to the Stockholm International Peace Research Institute and the World Bank, the rate of defense budget in Pakistan was between 3 to 4 percent of GDP between 2015 and 18. There was a time when the defense budget was seven percent of the country's GDP, but as it entered the 21st century, it declined sharply.
According to Dr Ashfaq Hassan, despite the difficult economic situation, this time the government will be under pressure from all sectors to increase salaries, mainly due to "rising inflation under the current government."
"Borrowing on IMF terms has pushed up inflation in the country to such an extent that all government employees, whether they are part of the armed forces or not, have been severely affected," he said. After the increase that is being sought now, the total effect will be 20% and I think the salaries of all other government employees will increase by the same amount.
However, he said, "Such losses are offset by revenue, but this time businesses are closing due to the corona virus, so there is no expectation of much increase."
It may be recalled that the Corona epidemic in Pakistan has severely affected the country's economy and Hafeez Sheikh, Advisor to the Prime Minister on Finance, said last Friday that the fiscal deficit would remain at nine per cent of GDP in the current financial year. It is feared that the tax collection target will not be met and this target will be reduced by about 20%.
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