The proposed federal budget for fiscal year 2026-27 places a strong emphasis on defence and infrastructure development, with significant allocations planned for both sectors.
Budget documents also indicate possible tax measures that could raise the cost of electric vehicles, solar panels and other consumer products.
According to budget proposals, the government has earmarked Rs2,665 billion for defence spending in the upcoming fiscal year.
At the same time, Rs1,126 billion has been proposed for the Public Sector Development Programme (PSDP), which finances federal development projects across the country.
Documents show that more than Rs1.1 trillion will be spent on development initiatives during fiscal year 2026-27.
Infrastructure projects top development priorities
Infrastructure development is set to receive the largest share of PSDP funding.
The proposed budget allocates Rs730 billion for infrastructure-related projects, making it the biggest component of the federal development programme.
Officials say the allocation reflects the government’s focus on transport, connectivity and other key public infrastructure schemes.
Increased spending for social sector
The proposed social sector development budget has been increased by Rs40 billion, bringing the total allocation to Rs187.2 billion.
Meanwhile, Rs179 billion has been proposed for water resource projects aimed at supporting ongoing and future development initiatives.
The government has also proposed allocating Rs45 billion for the physical planning and housing sector.
Education receives more than Rs77bln
The education sector is expected to receive a total allocation exceeding Rs77 billion.
According to the proposed figures:
- Rs36 billion has been allocated for the Federal Ministry of Education.
- Rs41 billion has been proposed for the Higher Education Commission (HEC).
The funding is intended to support educational development and higher learning initiatives across the country.
Rs22bln proposed for health projects
The proposed development budget sets aside Rs22 billion for the health sector.
The allocation is aimed at ensuring continuity of ongoing projects while supporting the launch of new healthcare initiatives.
EVs
Sources say the proposed budget includes tax measures that could increase the prices of several products, particularly in the clean energy and transport sectors.
Hybrid and electric vehicles, motorcycles, rickshaws, buses, trucks and solar panels may become more expensive if the proposed taxes are approved.
Electric pick-ups, tractors and double-cabin vehicles are also expected to be affected by the new taxation measures.
Proposal to strengthen GST collection
The government is also considering making it mandatory to print retail prices on a range of consumer products to improve General Sales Tax (GST) collection.
Products under consideration include:
- Formula milk
- Ketchup
- Ghee
- Cooking oil
- Tea leaves
Officials believe the measure could help ensure better tax compliance and revenue collection.
