Pakistan has decided to substantially hike its military spending in the wake of recent clashes with its archrival and nuclear-armed neighbor, India.

Islamabad has raised next year's defense budget to 2.55 trillion Pakistani rupees ($9 billion), compared to 2.12 trillion in the fiscal year ending this month, marking a jump of roughly 20% year over year.

The announcement came as Prime Minister Shehbaz Sharif's government unveiled its annual federal budget for the 2025-26 fiscal year on Tuesday.

The surge in military spending came despite Pakistan battling weak finances and tremendous economic challenges.

In fact, the overall spending planned in the budget is down 7% to 17.57 trillion rupees ($62 billion).

Pakistan's army sees surge in popularity

Pakistan and India recently witnessed a major flare-up in violence, the worst since the rivals' last open conflict in 1999, which sparked fears that it could spiral into a full-blown war.

It began after a deadly attack on Hindu tourists in Pahalgam town — in India-administered Kashmir — on April 22, in which 26 people, mostly Hindu men, were killed. 

New Delhi blamed Islamabad for backing the attack, an allegation Pakistan has denied.

The crisis soon spiraled into a military confrontation between the two nations. After four days, however, both sides agreed to a ceasefire.

Against this backdrop, the higher defense expenditures "aren't in the least surprising," said Michael Kugelman, a South Asia expert at the Washington-based Woodrow Wilson International Center for Scholars.

"There's the fundamental issue of needing to ensure sufficient resources in the aftermath of a serious conflict with India. Furthermore, the military, which surely sought these increased expenditures, is emboldened following the conflict and will look to push its agenda more rigorously," Kugelman told DW. 

Pakistan's military, the country's most powerful institution, had been unpopular in recent years, with many people accusing it of meddling in politics and keeping the country's most popular politician, Imran Khan, away from power.

But the military establishment has seen a surge in popularity after the recent fighting.

"Finally, with the nation fully behind Pakistan in its fight with India, the civilian and military leadership know that they have the political space to take these types of measures," said Kugelman. 

Struggling with economic crisis

Pakistan has been dealing with an economic crisis for years, marked by high inflation, a depreciating currency and International Monetary Fund (IMF) bailouts.

As recently as 2023, the country was staring at risk defaulting on its debts.

But a multibillion-dollar support package from the IMF has helped steady the economy and bring inflation under control.

In January, Pakistan agreed to an unprecedented 10-year plan with the World Bank which will see $20 billion (€19.4 billion) worth of loans for the cash-strapped economy.

Sharif's government now projects 4.2% economic expansion in 2025-26.

Growth this fiscal year is likely to be 2.7%, against an initial target of 3.6% set in last year's budget.

The reliance on the IMF means Islamabad will have to fulfill the institution's requirements for budget management and economic reforms.

The IMF has urged Pakistan to widen the tax base through reforms which include taxing agriculture, retail and real estate.

Analysts say Sharif's government plans to offset the increased defense budget with cuts to spending in other areas, including welfare. 

"It's a big hike and will have to be funded from somewhere. Of course, it will have implications for expenditure on the social sectors and on development schemes," Safiya Aftab, an Islamabad-based economist, told DW.

"It's unfortunate that Pakistan is once again implementing the economic policy of a security state, but to be honest, the situation on the borders makes this inevitable," she added.

False priorities?

Pakistan has faced criticism for years for its heavy military spending at the expense of health, education and social welfare.

Kugelman said raising military expenditure while slashing spending on welfare services could worsen the hardships faced by common people, who are already struggling to cope with the effects of the economic crisis.

"But those in power would contend that recent weeks show the imperative, for national security reasons, of these moves," he underlined.

"And they would also point to some improvements in macroeconomic stability, including lower inflation, though surely that wouldn't be a winning argument for the many Pakistanis still dealing with economic stress." 

Farhan Bokhari, an economic analyst, said there's broad support in Pakistan for higher defense spending, "for the moment," pointing to the tensions with India.

"But for the long term, Pakistan's economy needs to grow faster to be able to support larger defense spending in the years to come," he noted.

Edited by: Srinivas Mazumdaru