Defence expenditure as percentage of GDP has remained more or less around 2.2%.
The capital allocation/revenue expenditure has increased at a slower rate compared to pension allocation. But the biggest component is revenue expenditure, which is salary paid and maintenance expense.
Given that total allocation is 2.2% of gdp ,
1) Increase the GDP, which means greater economic growth every expenditure increases proportionally.
2) Reduce the pension allocation and increase the capital allocation.
3) cut the revenue expenditure by decreasing the number of ppl which will decrease both revenue expenditure and pension as well in future. (which is what govt is trying now).
4) Borrow more money. ( which we did last year, defence budget looks good but at the expense of big fiscal deficit 8-9%.) Thats the reason why budget numbers look good on paper showing increase. Now its time for option 3 , as we cannot run big deficit without increasing inflation.
expenditures are proportional but not for long without enuf borrowing.
Given the limited resource base and various competing demands, the MoD needs to work on a plan to optimise its allocated resources, rather than hoping to bridge its entire resource gap through additional funding from the Ministry of Finance.
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