Budget approval

The Budget 2026-27 gets the National Assembly's nod – albeit with some revisions in the treasury-proposed Finance Bill. The lower house, however, rejected all of the 63 amendments tabled by the opposition. A unique feature of the Budget is the first-ever contribution from the provinces, to the tune of Rs1 trillion. With the economy moving towards growth from a sustained phase of stabilisation, the Budget has revised income tax slabs for salaried individuals, apart from incorporating new levies and exemptions for corporate entities, digital income streams and property transactions.

While the Budget will generate Rs15,264 billion as taxes, specific legislative measures have been introduced to ensure its stringent compliance, like penalties of up to Rs2 million on non-filers. Last-minute amendments also saw revised taxation rates for banking, fertiliser and corporate sectors, as well as a cut in duties on imported vehicles and a higher tariff on imported EVs. The underperforming agriculture and industrial sectors will now see taxes on income above specified thresholds.

While the opposition dismissed the budget as anti-people, a speech from the leader of the opposition, Mehmood Achakzai, was laden with calls for political reconciliation, and taking the opposition along in decision-making. The PPP, after a brief, stage-managed display of political estrangement, returned to the fold to guarantee that NFC and BISP allocations remain completely untouchable.

To recap, the Rs18.8 trillion Budget envisages a growth target of 4%. A fiscal deficit of 3.6% of GDP is estimated with inflation supposed to hover around 8.2%. Debt servicing will devour Rs8,045 billion, defence will take Rs3,000 billion, and day-to-day government expenses will absorb Rs1,071 billion. No wonder the PSDP gets a mere Rs1 trillion.

In sum, despite a rhetorical shift toward stabilisation, the structural reality of the Budget remains unchanged - overwhelmed by the dual burdens of debt and defence, with public development reduced to a mere afterthought.