Punjab unveils Rs5.9 trillion budget with 7% salary hike and 3.5% pension increase

The Punjab government on Tuesday presented a Rs5.903 trillion budget for fiscal year 2026-27, proposing a 7% increase in salaries for government employees and a 3.5% rise in pensions, while maintaining a strong focus on education, health, infrastructure and development spending.

Punjab Finance Minister Mian Mujtaba Shuja-ur-Rehman presented the budget in the Punjab Assembly after it was approved by the provincial cabinet chaired by Chief Minister Maryam Nawaz Sharif.

The budget, the third under the current provincial government, is 10.7% higher than the previous year's outlay.

Addressing the assembly, the finance minister said the province had adopted austerity measures in line with federal directives while ensuring that development and welfare spending remained protected.

Revenue and fiscal position

According to budget documents, Punjab expects to receive Rs4.39 trillion under the National Finance Commission (NFC) Award in FY2026-27, an increase of 8.1% compared to the previous year.

The provincial government has projected its own-source revenue at Rs1.21 trillion and expects to post a budget surplus of Rs91 billion.

Mujtaba Shuja-ur-Rehman said Punjab had provided Rs546 billion to the federal government under national strategic requirements while continuing to support development and public welfare initiatives.

The Punjab Revenue Authority has been assigned a revenue collection target of Rs528.5 billion, representing a 55% increase, while the Excise Taxation and Narcotics Control Department has been given a target of Rs124 billion, up 77%.

Development spending

The government has earmarked Rs752 billion for the Annual Development Programme (ADP) for FY2026-27.

The finance minister said no compromise had been made on Punjab's development agenda despite fiscal constraints.

Chief Minister Maryam Nawaz Sharif stated that the government remained committed to public welfare and development projects despite a reduction in fiscal space and additional commitments to the federation.

Education sector

The education sector received the largest allocation of Rs750.1 billion, accounting for around 15% of the provincial budget.

The allocation includes funding for the Chief Minister Punjab Laptop Programme, under which 110,000 laptops will be distributed, the Honhaar Scholarship Programme and the School Meal Programme, which has been allocated Rs15 billion.

The government has also proposed Rs40 billion for the Maryam Nawaz Sharif Centre of Academic Leadership, the Nawaz Sharif Centre of Excellence and STEAM laboratory initiatives.

A further Rs6.9 billion has been earmarked for the establishment of information technology laboratories in colleges, while Rs1.9 billion has been allocated for autism schools in all divisions of the province.

Health sector

Punjab has allocated Rs500.6 billion for health in FY2026-27.

The budget includes Rs20 billion for the Nawaz Sharif Institute of Cancer Treatment and Research and Rs169 billion for the Nawaz Sharif Medical District.

Other major allocations include Rs15.21 billion for a cancer hospital in Dera Ghazi Khan, Rs23.37 billion for a children's hospital in Bahawalpur, Rs1.75 billion for Neuro Cath Labs under the Stroke Initiative and Rs5 billion for emergency services.

The government has also allocated funds for Maryam Nawaz Health Clinics across the province.

Salaries, pensions and local governments

The provincial government has proposed a 7% increase in salaries for government employees, taking salary expenditure to approximately Rs639 billion.

Pensions for retired employees will rise by 3.5%, with total pension spending projected at around Rs500 billion.

The budget also allocates Rs900 billion to the Punjab Finance Commission and Rs409.8 billion for local government-related expenditures.

Law and order

The government has allocated Rs252.1 billion for public safety and law and order.

Under the proposed spending plan, Rs2.2 billion will be used for the construction of police stations and posts in riverine areas, while Rs14 billion has been earmarked for establishing crime scene units in 28 districts.

The police department has separately been allocated Rs12.88 billion, while the judiciary will receive Rs3 billion.

Infrastructure, transport and agriculture

Infrastructure development has been allocated Rs272.8 billion, while the transport sector will receive Rs78.5 billion.

The government plans to spend Rs26.6 billion on mass transit projects in Gujranwala and Faisalabad, Rs16.8 billion on an electric bus programme and Rs10 billion on regional railway projects.

Agriculture has been allocated Rs91.9 billion under the proposed budget.

The province has also earmarked Rs221.9 billion for investment-related initiatives aimed at supporting economic activity and job creation.

Cabinet approval

Earlier in the day, Chief Minister Maryam Nawaz Sharif chaired the 35th meeting of the provincial cabinet, which formally approved the budget.

She said the budget had been prepared without imposing any new taxes and was designed to provide relief to citizens while supporting development and economic growth.

The chief minister directed the Punjab Revenue Authority to strengthen revenue collection efforts and expressed confidence that the budget would meet public expectations and support continued progress across the province.