The Cost of Power: How Pakistan’s military economy is undermining its future (IANS Analysis)

New Delhi, May 25 Pakistan’s enduring economic difficulties are well recognised globally. In recent years, the nation has experienced alarming inflation, an ongoing crisis in foreign exchange reserves, and an overwhelming debt burden. These issues have led to widespread unemployment, increased poverty, and daily hardships for a population already caught in the crossfire of recurring terrorist violence and military operations ostensibly aimed at countering it.

Nevertheless, despite this worsening scenario and the harsh effects of austerity measures imposed by the IMF on the populace, Pakistan's disproportionately large military appears unaffected and is, in fact, gradually expanding its share of the national economy.

The expansive role of the military in Pakistan’s domestic affairs extends beyond politics and foreign policy, significantly permeating the economic sphere. To begin with, the military absorbs a substantial portion of the GDP -- Pakistan's defence expenditure for FY 2025 stood at 2.3 per cent of GDP, exceeding equivalent figures for India, China, and the European Union.

According to study by a leading business portal, Pakistan's defence budget experienced an annual growth rate of 12.6 per cent between FY17 and FY25, compared to India's 8 per cent. In contrast, education and healthcare were allocated merely 2 per cent and 1.3 per cent of the GDP, respectively.

In addition, the military has developed an extensive private conglomerate, commonly referred to as the ‘milbus’ (military business) -- a term introduced by prominent scholar Ayesha Siddiqa in her seminal work Military Inc.: Inside Pakistan’s Military Economy.

Through a network of commercial enterprises, including the Fauji Foundation, Army Welfare Trust, Shaheen Foundation, Bahria Foundation, and the highly contentious Defence Housing Authority (DHA), the military has embedded itself across numerous sectors such as real estate, banking, manufacturing, agriculture, shipping, education, and media. Some estimates suggest that the military controls approximately 12 per cent of the nation's land.

Although the military and its proponents contend that the professionalism, stability, and efficiency it represents are reflected in its economic endeavours, many critics challenge the monopolistic, expansive, and opaque nature of this military dominance.

Defence-operated industries suppress local competition and private enterprise, while benefiting from tax concessions and minimal regulatory oversight.

The DHA—initially established to offer affordable housing for retired military personnel but now catering to elite residential projects—has faced widespread criticism over questionable land acquisitions and community displacements to benefit the privileged. Moreover, the inclusion of senior military officials in the 2021 Pandora Papers exposed the extent to which they funnel vital national assets through offshore financial channels.

The ‘milbus’ in Pakistan has not only exacerbated the persistent and severe underinvestment in human development, but the military’s substantial economic influence also reinforces its political dominance within the country. It is well established that the military remains the most powerful institution in Pakistan, having governed directly for nearly three decades and exerting significant influence behind the scenes during periods of civilian administration.

Given the military’s pervasive control over the economy, civilian governments are largely stripped of the ability to make independent decisions based on the needs and interests of the populace.

Thus, the expansive economic domain of the military in Pakistan has a direct impact on the nation’s socio-economic stability. On one hand, defence-operated enterprises—shielded from public audits and regulatory scrutiny—create monopolies that undermine local businesses, deplete public resources, and significantly intensify inequality.

On the other hand, the ‘milbus’ entrenches authoritarianism, rendering civilian governments largely symbolic. At a time when the country’s economic crisis continues to spiral, inflicting severe hardship on ordinary citizens, it is essential to critically reassess the allocation of national resources, particularly those directed towards the military.

The military's vast commercial ventures must be brought under the same regulatory framework as civilian enterprises, and its market dominance restricted.

Achieving this requires a fundamental recalibration of civil-military relations, along with a reflective discourse on the appropriate role of the military within a democratic framework.

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