On debt bed, Pakistan to hike defence budget amid India's Operation Sindoor
Pakistan's Planning Minister, Ahsan Iqbal, on Saturday confirmed that the federal government would raise its defence budget for the upcoming 2025-26 fiscal year, citing the recent military escalation with India and New Delhi's suspension of the Indus Waters Treaty as key factors behind the decision, reported Karachi-based newspaper Dawn.He said there was no pressure from the IMF in shaping or finalising the federal budget.Iqbal's announcement came just weeks after Pakistan's federal government, led by the PML(N), reportedly approved an 18% hike in defence expenditure, raising the allocation to over Rs 2.5 trillion in the upcoming budget. It, too, cited the escalation in tensions with India as a key reason for the defence budget hike.DEFENCE SPENDING RISES EVEN AS PAKISTAN'S ECONOMY BLEEDSadvertisementThe increased defence spending amid economic fragility in Pakistan has always been the subject of debate.Pakistan's reliance on bailouts and foreign aid continues to empower its military establishment, even as critical sectors like education, healthcare, and poverty alleviation remain sidelined.This reflects a deeper paradox of elite-driven economic decision-making, where national priorities are often shaped by security concerns over social welfare, according to Soumya Bhowmick, a Fellow at the New Delhi-based Observer Research Foundation (ORF).Pakistani economic journalist Afshan Subohi, in her May 19 column in Dawn, questioned who would bear the cost of the defence hike in a cash-strapped economy. The piece was published after the federal government signalled it would raise the defence budget by 18%."The current tense regional environment likely underpins the government's proposal, endorsed by its largest coalition partner, the Pakistan Peoples' Party, to raise the defence budget by 18 per cent for the next fiscal year. The critical question for a resource-constrained country, however, remains: who will pay for it?" asked Subohi.Even in June 2024, Pakistan's defence forces got a nearly 17.6% budgetary hike, amounting to Rs 2.12 trillion (PKR)."Pakistan's tax revenues are relatively modest, but its defense spending is massive, largely because the military is the country's de facto ruler. A bankrupt Pakistan is already receiving one IMF bailout and is seeking another, yet it unveils a 17.6% rise in its big defence budget," geostrategist and academic Brahma Chellaney wrote on X in June 2024.CASH-STRAPPED PAKISTAN TO HIKE DEFENCE SPENDING AMID TENSIONS WITH INDIAadvertisementIslamabad's announcement of an increase in its defence budget follows India's Operation Sindoor, in which Indian forces targeted terror bases in Pakistan and Pakistan-occupied Kashmir (POK), after the April 22 Pahalgam attack.Operation Sindoor successfully destroyed nine terrorist camps linked to Lashkar-e-Taiba, Jaish-e-Mohammed, and Hizbul Mujahideen in Pakistan and Pakistan-occupied Kashmir, killing over 100 terrorists, including high-value targets like Yusuf Azhar and Abdul Rauf Azhar.India's advanced airpower, with precision strikes in a 25-minute operation, exposed gaps in Pakistan's air defence network.Pakistan's targeting of military and civilian areas made Indian armed forces retaliate by striking key military installations in Pakistan and cripple its air defences.Retaliating Pakistan's drone and missile attacks on Indian civilian and military infrastructure, Indian air defence systems effectively neutralised Pakistani strikes. Moreover, Indian forces hit key military infrastructure, like airbases at Noor Khan and Rahimyar Khan, where its technological superiority and strategic restraint were on display.advertisementAmid heightened military tensions in the lead-up to India's Operation Sindoor, Pakistani daily The Express Tribune reported in early May that the government was weighing additional hikes to the proposed defence budget to counter "Indian aggression" and boost investment in indigenous research and development.India, in response, raised concerns about Pakistan's fiscal priorities, with Foreign Secretary Vikram Misri urging the IMF to reconsider its bailout packages due to the potential misuse of funds for military purposes.PAK SPENDING BAILOUT MONEY ON DEFENCE AMID CASH CRUNCHPakistan's reliance on IMF bailouts, 25 loans since 1950, including four in the last five years, reveals its chronic economic instability. Pakistan's loans from the IMF alone stood at $6.2 billion as of March 31, 2025, according to the IMF.Yet, despite this cash crunch, Pakistan's civilian regime, whose reins lie in the hands of the military, is prioritising defence spending, which already accounts for nearly 18% of the federal budget.While the IMF warned that tensions with India could jeopardise Pakistan's fiscal and reform goals, Finance Minister Muhammad Aurangzeb claimed that the recent escalation with India would have "minimal fiscal impact" and could be accommodated within the current fiscal space.In choosing to prioritise defence spending amid economic freefall, Pakistan is once again leaning into its military-first doctrine, despite the long-term risks to its economic recovery and human development.Must Watch
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Indian Express
17 minutes ago
- Indian Express
For ‘creamy layer' exclusion, Govt looks at proposal on ‘equivalence' across govt organisations, pvt sector, universities
The government is learnt to be actively considering a proposal to apply the Other Backward Classes 'creamy layer' income exclusion yardstick to attain 'equivalence' among various Central and state government organisations, public sector enterprises, universities and private sector employees. It is learnt that the proposal has been prepared following consultations among the ministries of Social Justice and Empowerment, Education, Department of Personnel and Training (DoPT), Legal Affairs, Labour and Employment, Public Enterprises, NITI Aayog and National Commission for Backward Classes (NCBC). Following the landmark Indra Sawhney vs Union Of India ruling, also known as the Mandal verdict, by the Supreme Court in 1992, the concept of 'creamy layer' within the OBCs was introduced in the reservation policy. The 'creamy layer' criteria for those not in government jobs, set at Rs 1 lakh per annum in 1993, was revised in 2004, 2008, 2013. In 2017, the income ceiling was revised to Rs 8 lakh per annum and has remained so ever since. The 'creamy layer' specifies groups among OBCs such as persons occupying constitutional posts; Group-A/Class-I officers of All India Services, Central services and state services; Group-B/Class-II services of Centre and state; employees of PSUs; officers of armed forces; professionals and those from trade and industry; property owners; and an income/wealth test. While 'equivalence' in some Central PSUs was decided in 2017, it remained pending for the private sector as well as universities, educational institutions and different organisations of state governments. The OBCs of the 'non-creamy' layer are granted 27 per cent reservation in Central government recruitments as well as in admissions to educational institutions, based on the Mandal Commission recommendations. In state governments, this reservation percentage varies. In absence of such equivalence, there was difficulty in issuing caste certificates to OBCs. Sources said since the salary of teaching staff of universities, such as assistant professors, associate professors and professors, typically starts from Level 10 and above, which is equivalent to or higher than Group-A posts in the government, there is a proposal that these posts be categorised as 'creamy layer'. This means their children cannot avail benefits of OBC reservation. In the private sector, given the vast gamut of categories of posts and pay and perquisites, it has been noted that it is difficult to establish the equivalence. It is proposed that this can be determined based on the income/wealth criteria. For Central/state autonomous bodies and Central/state statutory organisations, sources said it is proposed to establish equivalence with the list of Central government officials, depending on their level/group/pay scale, as the case may be, because they also adopt the pay scales of respective categories in Central and state governments. Similarly, non-teaching staff of universities are proposed to be placed as creamy layer depending on their level/group/pay scale as the case may be. For state PSUs, it is proposed that as in the case of equivalence in Central PSUs in 2017, all executive level positions, including board-level executives as well as below board-level executives holding managerial positions, are to be treated as under the 'creamy layer' category. However, in their case, a rider has been proposed that those executives whose income is within Rs 8 lakh, which is presently the limit for private persons, will not be categorised as 'creamy layer'. For government-aided institutions, it is proposed that as they generally follow the service conditions and pay scales of the respective Central or state government, the staff in aided institutions may be placed under appropriate categories based on the equivalence of their post and service conditions and pay scales/level. Sources said a large number of cases are pending before the Supreme Court and various High Courts regarding the ambiguity and, therefore, clarity is a must. 'The proposal entails empowerment of OBCs by way of their coverage which will widen the employment opportunities for OBCs,' a top source said, adding that 'by widening the scope of opportunities for OBCs in employment, it will support Atmanirbhar Bharat.'
Indian Express
17 minutes ago
- Indian Express
Trump's 50% tariff: Beginning to get foothold in US market, Agra's leather belt takes a hit
US Tariffs Impact on Indians: In a sprawling shoe manufacturing unit in Agra, men in sweat-soaked vests move along the assembly lines in a choreography honed over the years — working in perfect rhythm, their hands following the machine's pace. As each shoe travels down the conveyor belt, it pauses briefly at each station dedicated to a specific task, such as removing wrinkles, cotton brushing, seat lasting, sole heat activation — a display of how a hundred small acts turn the raw leather into products destined for sale in international markets, including the US. However, US President Donald Trump's decision to raise tariffs on Indian goods — hiking duties on leather footwear from 5-8% to 25%, with a further 25% increase threatened by August 27 — has cast a shadow over the unit. India's leather exports across the world rose from $3,681 million in 2020-21 to $4,828 million in 2024-25 — a 31% rise. In the same period, exports to the US rose from $645 million to $1,045 million — a 62% jump. For manufacturers who had only recently begun gaining a foothold in the US market, the move has come as a significant setback. 'There will definitely be an impact. We only have three US-based customers, as most of Agra's exports have traditionally gone to Europe. But the US was a major market we were trying to enter. It's a huge consumer base, and any success there would have changed the scale of our business. This is going to slow that push down,' said Sushant Dhapodkar of Tej International Pvt Ltd. Agra is one of India's largest footwear manufacturing hubs, alongside Kolkata, Kanpur and Chennai. The city has around 10,000 micro-units apart from 150 small-, 30 medium-, and around 15 large-scale industries. Many use leather imported from Turkey, which takes 45–50 days to arrive via road, along with Indian leather sourced mainly from Kanpur and Chennai, and some from Jalandhar. While Europe remains the mainstay for Agra's leather shoe exporters, the US market, the largest consumer base in the world — accounting for 24% of global consumption despite just 4% of the population — has been developing fast. In the last quarter alone, nearly half of Agra's export business, worth about $594 million, went to the US. The growth was so sharp that many manufacturers had invested heavily in expanding production capacity. 'Those who were earlier working on six assembly lines are now running 14,' said Puran Dawar, chairman of the Development Council for Footwear and Leather Industry and president of the Agra Footwear Manufacturers and Exporters Chamber. 'We ourselves had set up a unit bigger than our existing one to tap into the US market. That's definitely out of the question now.' The tariff announcement has also come at the peak of production for autumn and winter collections — the busiest for Agra's export factories. Orders for leather boots, closed-toe shoes, and high-end formal wear are typically placed months in advance by American buyers. These are now in the final stage of production or ready for shipment — but buyers have been calling to put the stock on hold. According to manufacturers, some buyers are ready to look towards China for an alternative. Dawar said: 'This is the peak season for autumn and winter orders, and buyers are already telling us to hold shipments, even for goods ready to go. They want us to share the tariff loss. But the US is a price-sensitive market — nobody can afford to share even 12.5% of the burden, let alone 50%. Some buyers have already cancelled and are looking to China because their tariff is 30%, and to Vietnam, where it's just 20%. We can't compete at those rates.' Nazir Ahmed, owner of Park Exports, said the problem goes far beyond price competition. 'Now with the initial 25%, it's going to be a disaster unless Trump goes back to the original tariff,' he said. 'This won't just be a problem for India, but for the US as well… the higher the duty, the more expensive their product will be. In countries where lower tariffs are imposed, they will have the advantage, and we wouldn't be able to compete with them,' said Ahmed. He also highlighted the potential impact back home. 'If orders aren't placed, factories will be without work. And if factories are without work, workers will be without work. This industry is labour-intensive, so unemployment could run into millions if this continues. And I'm not just talking about manufacturing — textiles, tools, every industry linked to this process will take a hit,' he said. Manufacturers said the setback is particularly bitter because of the efforts they made to break into the US market. 'It's a setback to our plans to double or triple exports to the US,' Ahmed said. 'The government increases targets every year, and the American market has the potential to match our exports to Europe. Now all that planning is on hold.' Others, like Dawar, believe the hike is a 'pressure tactic' and will eventually be rolled back. 'The government is in touch with us to see how they can help. We were called to meet Commerce Minister Piyush Goyal last week to discuss relief. One idea discussed was that the government could bear a part of the hike, and the remaining could be between the manufacturer and the US importer.' The current uncertainty, meanwhile, is already triggering ripple effects beyond Agra. Naseem Khan, a Kanpur tannery owner whose leather is supplied to manufacturers linked to US exports, said clients have begun cancelling or freezing orders. 'Whatever the stage of production, they're saying stop immediately. Even though we don't directly export to the US, we are deeply connected; the leather we produce is approved by those who manufacture finished goods for the US,' Khan said. Meanwhile, exporters are brainstorming alternatives. Russia, once a major market for Agra, is being considered for revival. Others are looking inward to India's growing middle class — a customer base whose purchasing power has risen in recent years. Until now, much of the footwear sold domestically was made locally from scraps and leftovers of the export process. But with international orders in limbo, manufacturers are weighing whether to redirect their best designs and full-scale production to the home turf. Chairman, Council for Leather Export, Rajendra Kumar Jalan said, 'Currently, the dispatches have come to a standstill. All US buyers and Indian manufacturers exporting finished goods to the US have put their orders on pause because of the 50% tax. When the tax was raised to 25%, there was still some hope — we were still on par with competing nations like Bangladesh, Indonesia, Vietnam, and, to some extent, China. But now, we are completely out of the picture. China, in fact, is gaining an advantage because the additional Russian oil tariffs do not apply to them, and they also enjoy a 90-day moratorium.' 'That being said, the US purchases from us are in large volumes, and for these bulk buyers, getting an alternative source of production for these huge orders, and that too in a short period, will be extremely difficult,' said Jalan 'At present, the reaction is one of panic. But we remain hopeful of finding alternative markets. There will be competition from other leather manufacturing nations, but our focus will be on countries where India has signed or is about to sign an FTA — countries such as Chile, Peru, and some European nations,' he said. — With inputs from Nirbhay Thakur
Time of India
31 minutes ago
- Time of India
Finance min urges banks to ramp up lending in J'khand
1 2 Ranchi: Finance minister Radha Krishana Kishore on Tuesday expressed concern over the slow improvement in the credit deposit (CD) ratio of the state, adding that at this pace, it would take around one and a half decades to reach the national average. It may be stated here that during the 92nd state-level bankers' committee (SLBC) meeting held at Project Bhawan, the officials informed that the CD ratio reached 51.32% as of June 30, 2025, compared to 49.57% last year. The deposits amounted to Rs 3,69,098 crore, while the advances were Rs 1,89,436 crore. Addressing the meeting, the finance minister said, "The CD ratio was 50.68% on March 31, 2025. It grew by 0.64% in the last three months. With this increment, it would take at least 15 years to reach the national average of 77%." He also stated that apart from agriculture, lending by banks has made significant progress in various sectors but not at the desired level. He added that banks should also focus on improving the CD ratio in areas with low per capita income. He said that bankers should review which banks are poor in lending to the weaker sections. Kishore said banks must also know whether the loans sanctioned by them are being properly utilised or not. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Unleash Your Green Thumb: 15 Hacks Every Gardener Needs to Know! Kingdom Of Men Undo "Banks must provide details about the manner of spending their corporate social responsibility fund. I have come to know that in a district, it was used for putting up ceiling fans in the police line. The money should be used for the construction of infrastructure," he added. Kishore said he would talk to officials about setting up parameters so that the banks working the most in the social sector would get the govt deposits. Speaking to media, he stated that the problems in the acquisition of land for industries due to the Santhal Paragana Act and the Chhotanagpur Tenancy Act have prevented the capitalists from coming here, which in turn has affected the CD ratio. Agriculture minister Shilpi Neha Tirkey said, "At present, banks have sanctioned Rs 13 lakh kisan credit card loans against the target of Rs 25 lakh this financial year. She said, "Banks have been instructed to provide loans as soon as possible in view of the negative impact on farmers due to the excessive rainfall. Instructions have also been issued to banks to point out various loopholes in the implementation of the Guruji Credit Card scheme so that changes can be made in plan. " Stay updated with the latest local news from your city on Times of India (TOI). Check upcoming bank holidays , public holidays , and current gold rates and silver prices in your area.
