Sindh presents Rs3.56 trillion budget for FY2026-27, projects Rs36.9 billion deficit

The Sindh government on Wednesday unveiled a Rs3.562 trillion budget for fiscal year 2026-27, projecting a deficit of Rs36.9 billion as Chief Minister Syed Murad Ali Shah presented the financial plan for the thirteenth time amid opposition protests and a walkout from the provincial assembly.

The chief minister said no new taxes had been imposed in the budget, describing it as a relief-oriented package aimed at supporting the public and business community. He added that the fiscal framework had been presented in a challenging global environment marked by geopolitical tensions, trade disruptions, inflationary pressure and market volatility.

On the spending side, the provincial government proposed Rs2.56 trillion for current revenue expenditure (CRE), reflecting a 20% increase over last year’s estimates.

In contrast, development spending was sharply reduced. The Annual Development Programme (ADP) for FY2026-27 was set at Rs720.385 billion, down 30% from Rs1.018 trillion in the previous year. The chief minister said the reduction would be absorbed across development components.

Officials linked the decline in development allocation to rising defence and national security expenditures at the federal level and higher operational costs driven by energy market volatility and fuel price pressures, which have increased the cost of infrastructure and service delivery projects.

Sector-wise current expenditure allocations include Rs446.958 billion for school education services, Rs354.271 billion for health services, Rs216.537 billion for law and order, Rs201.39 billion for local government services, Rs66.48 billion for energy, Rs41.1 billion for irrigation, Rs38.22 billion for agriculture, Rs18.291 billion for works and services, Rs27.565 billion for law and parliamentary affairs, Rs11.6 billion for livestock and fisheries, Rs8.18 billion for public health engineering and Rs10.856 billion for information and publicity.

Subsidies were allocated Rs133.54 billion, while debt servicing and interest payments were estimated at Rs54.25 billion.

Within the development portfolio, major allocations include Rs121.663 billion for local government services, Rs40.86 billion for public health engineering, Rs39.536 billion for transport and communication, Rs30.94 billion for irrigation, Rs25.860 billion for education, Rs17.433 billion for health and Rs6.30 billion for agriculture and livestock.

Karachi received a dedicated allocation of Rs100.19 billion for infrastructure, water supply, sanitation, traffic management and education-related projects. The government also confirmed the extension of the Shahrah-e-Bhutto corridor from Qayyumabad to Karachi Port.

On social protection, the Benazir Hari Card Programme was allocated Rs3 billion, while the Sindh Peoples Support Programme and Benazir Housing initiatives received Rs2 billion each.

On the revenue side, the budget introduced several tax adjustments, including a reduction of sales tax on education support services to 5% and continuation of a reduced 5% rate for overseas employment recruiting agents for another two years. Beauty parlours and salons were brought under mandatory POS integration while remaining taxed at 8%.

Relief measures also included cuts in insurance-related taxes, with rates for agents and brokers reduced to 2% and 3%, respectively. The exemption threshold for individual life insurance coverage was raised from Rs0.5 million to Rs3.5 million.

In agriculture, the super tax structure was revised by increasing the exemption threshold from Rs150 million to Rs500 million and lowering the rate from 10% to 8%.

The provincial government also announced a 7% increase in salaries and pensions for government employees and raised the minimum monthly wage to Rs43,000.

The budget was approved in a cabinet meeting chaired by CM Murad Ali Shah, who reiterated the government’s focus on poverty reduction, inclusive development and public welfare. Opposition lawmakers, however, staged a walkout, with criticism that urban Sindh was underrepresented in the fiscal plan.

The session concluded with the chief minister reaffirming continued investment in development and social protection programmes alongside fiscal discipline in a constrained economic environment.