High hopes on shaky ground

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Punjab's Rs5.35 trillion budget for FY26 boldly prioritises development over austerity, with no new taxes and a record 47% surge in the Annual Development Programme to Rs1.24 trillion. But beneath the ambitious veneer lie formidable execution risks and structural tensions. The budget's core is inclusive development, with a 21% increase in the education spending to Rs812 billion, and a 17% raise in healthcare spending, including Rs72 billion of the total Rs630 million health budget going to the Nawaz Sharif Institute of Cancer Treatment and Research.

Wages and pensions are also up by 10% and 5%, respectively, and the minimum wage has been set at Rs40,000. Roads and other infrastructure -— always a PML-N priority — will also get significant funding. But while these numbers may suggest a keen desire to invest in the province, funding sources are, at best, unreliable.

Much like Sindh, the Punjab budget is dependent on timely transfers from the federal government. Unlike Sindh, the Punjab government is claiming a Rs740 billion surplus, equivalent to almost 14% of the total budget, and well in line with the IMF's expectations. Even if there is a significant revenue shortfall, the projected surplus could easily absorb it.

Still, surplus or not, potentially delayed federal transfers and the consistently underwhelming performance of the Punjab Revenue Authority may create unnecessary headaches in the coming fiscal year. The PTI-led opposition has also questioned the opacity of the revenue projection required to post a surplus and highlighted the need for monitoring of the planned expenditure.

Other experts have also noted that both agriculture and the environment are underfunded. The budget, as presented, could lay the groundwork for notable long-term growth and social gains, but its reliance on expanding the tax net without shifting any burden onto the poor is not going to inspire confidence in too many people.