Pakistan is increasing its military budget 16 percent (nearly a billion dollars). A lot of this will cover the additional expenses of the escalating war in the tribal territories against Pushtun and Baluchi tribesmen. The military also wants to continue improving living standards of the troops. This began only two years ago, when a new commander of the Pakistani armed forces decided to implement reforms, starting with improving the living conditions, and morale, of the troops.
There are 619,000 personnel in the Pakistani armed forces, most of them in the army. It's an all volunteer force, and recruiters can be picky about who they let in, for there is no shortage of applicants. The official military budget is about $5.3 billion a year. That's about three percent of GDP. But in reality, the military get close to 7 percent of GDP. That because the military has a welfare trust (the Fauji Foundation), set up over half a century ago, that controls commercial firms amounting to about six percent of GDP. Profits from these operations pay for health, education and other benefits for members of the armed forces (active and retired) and their families.
The senior officers in the armed forces have benefitted most from this arrangement. The recent reforms sought to redeploy a lot of this money to improve health and education benefits for the troops and their families. Housing and living standards for troops will also be improved. All this was to improve the morale of the troops, and prevent disaffection because of growing operations against Islamic militants. The Taliban and al Qaeda have turned some parts of the Pushtun and Baluchi tribal territories into terrorist sanctuaries. From these locations, attacks are planned and carried out against targets within the tribal territories, and the rest of Pakistan. In effect, the Taliban and al Qaeda are at war with the government of Pakistan, and have made public announcements to that effect. But about fifteen percent of army personnel are Pushtun, and many of these have kin in the tribal territories. In this case, morale and motivation matters, a lot.
While much of the billions of dollars of military aid given to Pakistan by the United States consisted of weapons and equipment, the Pakistani government has tried to divert some of that cash to building up morale among the troops. So far, this appears to have worked, so far.