"The Pakistan People's Party government should not think about downsizing the army," he warned.
The federal government should increase the defence budget, which has been frozen for the past three years, he added.
The former army chief, who is also president of the All Pakistan Muslim League, made the remarks while addressing members of the Pakistan Ex-Servicemen's Association via video link from London yesterday.
Musharraf has been living in self-exile in London and Dubai since early 2009. Musharraf said the impression that a lot is being spent on defence is wrong.
"In the previous budget of Rs 3,770 billion, only Rs 570 billion was allocated for defence, showing the government's lack of priority towards it," he said.
Only 17 per cent of the budget is being spent on the country's defence, he contended.
Also Read
"The government is using 32 per cent of the total budget for its expenditures, which is 15 per cent more than its allocation for defence," he said.
Musharraf deferred plans to come back to Pakistan to lead his party in the next general election after the government warned he would be arrested on his return.