Punjab Finance Minister Mujtaba Shuja-ur-Rehman on Monday presented a formidable Rs5.335 trillion provincial budget for the Fiscal Year 2025-26. A standout feature of the budget is a record Rs1.24 trillion allocated for development, marking an impressive 47% increase over the previous year, signaling a strong commitment to infrastructure and social sector growth.
Unveiled a week after the federal budget, the provincial fiscal plan aligns with the federal government’s ongoing agreement with the International Monetary Fund (IMF). In line with this, the Punjab government has announced an estimated provincial surplus (EPS) of Rs740 billion for FY26, highlighting a renewed focus on fiscal discipline.
Fiscal Allocations and Revenue Targets
Of the total budget outlay, Rs2.706 trillion has been earmarked for current (non-development) expenditures, which includes crucial allocations for pensions and salaries, reflecting a 6% increase from the previous year. An additional Rs590 billion has been budgeted under current capital expenditure, covering various operational needs.
The province anticipates federal transfers amounting to Rs4.062 trillion. Crucially, Punjab’s own-source revenue target has been set at Rs828.2 billion. The Finance Minister emphasized that achieving the projected provincial surplus is directly contingent upon the Federal Board of Revenue (FBR) successfully meeting its overall revenue collection target.
In his address, Minister Rehman highlighted the completion of 6,104 development projects in the outgoing fiscal year, underscoring the government’s momentum. He reiterated Punjab’s commitment to making long-term investments across critical sectors such as health, education, infrastructure, and municipal development.
Development Focus and Key Initiatives
The colossal Rs1.24 trillion development budget places a strong emphasis on social sector spending, with Rs494 billion—representing 40% of the total development outlay—specifically allocated for this segment. Within the social sector, the education sector alone will receive Rs148 billion for development initiatives, complemented by Rs661 billion for non-development education expenditures.
Among the major new initiatives announced, a significant allocation of Rs72 billion has been made for the establishment of the Nawaz Sharif Institute of Cancer Treatment and Research in Lahore. Additionally, plans are underway to expand the existing Nawaz Sharif Medical City under a public-private partnership framework, aiming to enhance healthcare services.
The budget also proposes a substantial Rs70 billion social security package and allocates Rs764.2 billion for local governments. Further support includes earmarking Rs150 billion as special grants for waste management companies and Rs20 billion for municipal corporations, emphasizing urban development and cleanliness.
Education and Tax Policy
In the education sector, the Chief Minister’s Laptop Scheme has been allocated Rs15.1 billion for the distribution of laptops to students. A further Rs15 billion has been budgeted for a merit-based scholarship programme, designed to provide financial support to deserving students across the province.
Notably, no new taxes were introduced in the budget, in line with earlier indications of a tax-free provincial fiscal plan. Infrastructure development remains a central pillar of the government’s agenda, alongside broader initiatives aimed at expanding access to clean drinking water and improving sanitation systems throughout Punjab.
Assembly Reaction
The budget session in the provincial assembly was marked by protests from opposition lawmakers affiliated with the Pakistan Tehreek-e-Insaf (PTI). They disrupted the proceedings as the finance minister delivered his speech, reflecting the charged political environment.
Overall, the Punjab budget for FY26 reflects the provincial government’s dual intent: to support economic growth through significantly higher development spending while rigorously maintaining fiscal discipline within the broader IMF-led federal economic framework.
