ISLAMABAD - Federal Finance Minister Ishaq Dar, presenting the federal budget in the National Assembly on Tuesday, announced 12.5 percent increase in the defence allocation as compared to that of the previous year.

Federal Finance Minister Ishaq Dar proposed defence allocation of Rs 706 billion ($7.06 billion) for fiscal 2014-15. The budget document, presented in the National Assembly by Finance Minister Ishaq Dar, said Rs 706 billion had been proposed for defence services for the fiscal year 2014-15.

The pension of defence personnel is still part of the civilian pension pool with a total outlay of around 140 billion and they are consuming over 80 per cent of it. The step was taken during Gen Musharaf's rule. In a rare show, Dar visited GHQ for discussion on the defence budget measures and to listen to the military high-ups on their budgetary demands. But he did not touch the thorny issue of separating the civilian and military pensioners, which was being widely demanded.

The Nawaz-led PML-N government announced its second budget on Tuesday after assuming power a year ago against a backdrop of high inflation, weak economic growth and the grave energy crisis.

In the fiscal year 2013-14, the government had allocated Rs 627 billion for defence services. Later, that allocation was revised and increased to Rs 637 billion. Hence, the hike in the defence budget in the next fiscal year is 12.5 percent more if it is compared to the actual allocations announced in the last budget, but comparison with the revised allocations of Rs 637 billion makes it an increase of 10.91 percent.

According to budgetary allocations, the army will get the major share of the outlay with over Rs 350 billion, the air force Rs 150 billion and the Navy Rs 71 billion.

The budget document shows the government allocated Rs 937.327 million for Defence Production Division in the Public Sector Development Programme (PSDP) for 2014-15.

Of this amount, Rs 900 million have been allocated for installing a ship lift, transfer system and associated machinery and equipment to provide docking and repair facilities for surface ships, submarines and commercial vessels at the Karachi port.