Islamabad: Pakistan is planning to hike the defence budget by 12 percent for next fiscal to Rs 495 billion. Total military spending of the country is likely to be more than Rs 767 billion, say reports. 

The "stated" defence budget for 2011-12 is likely to be Rs 495 billion, an increase of Rs 53 billion or 12 per cent over the previous year's "stated" budget of Rs 442 billion, according to reports.

However, total military expenses are likely to exceed Rs 767 billion, though not all of this amount will be paid by Pakistani taxpayers, the report said.

While the stated outlay will be just over a quarter of the government's targeted tax revenues, the daily said that an analysis of the defence allocation suggests that the numbers understate the full costs of military spending".

The "stated" budget for the next fiscal will have a rate of increase that is nominally below inflation.

"This, however, masks actual defence expenditures in several ways, including transferring military pensions to civilian expenses and counting security operations separately," the report said.

The government is likely to allocate Rs 216 billion for security purposes under several nondescript headings, which include military operations and are paid for in part by Coalition Support Funds received from the US and grants from the federal government, the daily quoted Finance Ministry sources as saying.

The Finance Ministry shies away from discussing these grants in any detail.

In addition, the military pension bill is likely to be included in the civilian side of the federal budget, continuing an "accounting trick" first employed by the regime of former military ruler Pervez Musharraf.

For the outgoing fiscal year, the military pension bill came to Rs 60 billion and it is likely to be higher for the next fiscal.

Stated nominal military expenses have risen 29 percent over the past two fiscal years, almost exactly in line with inflation, despite several military operations against militants in the tribal areas and Swat district.

Independent analysts believe the military allocations may need to be reviewed in light of the May 2 US raid on a compound in Abbottabad that killed al-Qaeda leader Osama bin Laden.

"We cannot dole out money any more without assessing the actual needs and without setting the benchmarks," said defence analyst Ayesha Siddiqa.

"It is high time to issue a white paper on defence to assess what we have so far got and what we lost and what are the actual security needs."

Even former military officials conceded that more oversight may be needed.

"Effective oversight of the defence budget is a must. It is also good for the country and democracy," said Lt Gen (retired) Talat Masood, a leading defence analyst.

Masood said unless the government introduces real oversight of the defence budget it will remain dependent on the Army.

Defence budgets have never been debated in Parliament and are always assumed to be a given during the presentation of the annual budget. In the past, defence budgets were frequently limited to one line. Over the last few years, it has expanded to three lines but no further details are given.

For fiscal year 2010-11, the full extent of military expenditure will only be made clear when the government announces its supplemental budget, to be released on the eve of the new budget for fiscal year 2011-12.