KP announces Rs2.17 trillion budget, sets aside Rs524 billion for development projects

Khyber-Pakhtunkhwa Chief Minister Sohail Afridi on Friday described the province’s “Khushhal Khyber-Pakhtunkhwa” budget for fiscal year 2026-27 as “prosperous” and “revolutionary” after the provincial cabinet approved the Rs2.12 trillion budget, which includes a proposed 7 per cent increase in salaries and pensions and a rise in the minimum monthly wage to Rs45,000.

Presenting the budget, Chief Minister Sohail Afridi said the financial plan carries a deficit of Rs48 billion, with total expenditure projected at Rs2.170 trillion against revenues of Rs2.122 trillion. He ruled out borrowing to bridge the shortfall.

“We will not ask anyone for loans to cover the Rs48 billion budget deficit,” he said.

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The total budget outlay has been set at Rs2.12 trillion, while official documents show estimated expenditures of Rs2.170 trillion against projected revenues of Rs2.122 trillion. Of the total, Rs524 billion has been allocated for the Annual Development Programme (ADP), while Rs1.645 trillion has been earmarked for current expenditure.

The government has proposed a seven per cent increase in salaries and pensions for government employees and an increase in the minimum monthly wage from Rs40,000 to Rs45,000.

No new taxes

The chief minister said no new taxes had been imposed for the upcoming fiscal year and that tax relief for the merged tribal districts and Provincially Administered Tribal Areas (PATA) would continue.

“The tax relief policy for the merged tribal districts and PATA will continue, and no new taxes have been imposed in the former Federally Administered Tribal Areas (FATA) and PATA for the next fiscal year,” he said.

The government also plans to merge the ad hoc relief allowances granted in 2022 and 2025 into employees’ basic pay, increase the conveyance allowance by 50 per cent, and raise the special conveyance allowance from Rs6,000 to Rs10,000.

Political protest during speech

At the start of his address, Afridi departed from budgetary matters to criticise restrictions on meetings with Pakistan Tehreek-e-Insaf (PTI) founder Imran Khan.

He said other political parties had been allowed access to their leaders, while PTI members had not.

“All political parties have been allowed to meet their leaders, but we have not,” he said, adding that even Khan’s wife, Bushra Bibi, had been denied access.

“These are his fundamental rights.”

His remarks triggered strong protests from opposition lawmakers, who interrupted the speech and demanded that he confine his address to budgetary matters.

“This is not a budget speech,” opposition members chanted.

Returning to the budget, Afridi said no grant had been allocated for the federal government and claimed the province had informed the federation it would not agree to any demand for additional funds unless a meeting with the PTI founder was allowed.

Review of outgoing year

Highlighting the government’s performance during the outgoing fiscal year, Afridi said 7,952 jobs had been created, 1,100 schools had been shifted to solar energy, and stipends of Rs9,000 each were distributed among 10,000 students in the merged districts.

He said Rs4.29 billion had been released for people affected by rains and floods during the current financial year.

The chief minister said Rs164.52 billion had been allocated for law and order during the outgoing fiscal year, enabling procurement of modern weapons, sniper rifles, thermal equipment, bulletproof vehicles, armoured personnel carriers and motorcycles for police.

He added that security arrangements in settled and merged districts had been strengthened through thermal binoculars, surveillance drones, anti-drone guns and jammers.

Key allocations

Among the major allocations, the government earmarked Rs52.8 billion for district governments, Rs29 billion for the merged tribal districts, and Rs52 billion under the Accelerated Implementation Programme (AIP) for merged areas.

Afridi announced Rs17 billion for temporarily displaced persons (TDPs), noting that the federal government had not released TDP-related funds since 2022.

Under social welfare initiatives, Rs15 billion has been allocated for the Ehsaas Mustahiq Programme and Rs1 billion for the “Ehsaas Maa, Nai Zindagi, Nai Umeed” programme.

Under the scheme, mothers will receive monthly financial assistance of Rs20,000 for each of their first two children.

The government has also allocated Rs1.1 billion for five Zamung Kor complexes and included two projects worth Rs1 billion for journalists’ welfare.

Funding for the Sehat Card Plus programme has been increased to Rs50 billion, while free medicines at public hospitals will receive Rs14.263 billion. Allocations for Medical Teaching Institutions (MTIs) have been raised to Rs80 billion.

The budget includes four projects worth Rs11 billion to upgrade Basic Health Units (BHUs) and Rural Health Centres (RHCs), while hospital management reforms will be expanded to another 72 hospitals.

Afridi said recruitment of 2,819 doctors, dental surgeons and nurses was under way.

The government has also allocated Rs9.9 billion to upgrade Category-D hospitals into teaching hospitals, Rs4 billion for a new general hospital in Peshawar, Rs200 million for free cancer treatment and Rs1.355 billion for health-sector roadmap initiatives.

In education, the budget allocates Rs18.5 billion for free textbooks, Rs10.34 billion for elementary and secondary education under the Good Governance Roadmap, Rs3.29 billion for improving low-performing schools, Rs360 million for the Taleem Card programme and Rs6.148 billion for Parent-Teacher Councils.

Infrastructure and transport

Afridi said 29 projects worth Rs120 billion had been included in the Peshawar Revitalisation Plan.

These include Rs4.8 billion for underpasses at various locations, Rs3.799 billion for underpasses at Ram Das Chowk, Lahori Chowk and University Road, Rs1.5 billion for Phase III of the Ring Road missing link, and Rs1 billion for underground electricity cabling in Peshawar.

He also announced the construction of a new Ring Road in the provincial capital.

The budget allocates Rs7.5 billion for BRT operational subsidies and procurement of buses, including electric buses worth Rs4.9 billion.

Other allocations include Rs2 billion for improving public transport in divisional headquarters, Rs2.2 billion for expanding Rescue 1122 services to all tehsils, and Rs2.5 billion in mark-up-free subsidies to promote electric bikes and rickshaws.

Afridi said Rs22.2 billion had been allocated as grants for local councils, while Rs343 billion would be released to cover expenditures of devolved district-level departments.

He also announced a Rs5 billion infrastructure package for Upper Chitral and said projects worth Rs31.5 billion had been included under the Rokhana Qabail package for merged districts and sub-divisions.

The budget further allocates Rs200 million for the Ehsaas Naujawan Programme in the merged districts.

‘Prosperous Khyber-Pakhtunkhwa’

Outlining the government’s priorities for the coming fiscal year, Afridi said the focus had shifted from infrastructure development alone to broader public welfare.

“Today, our focus has moved beyond building the province to ensuring the prosperity of the people,” he said.

He added that the budget reflected the vision of a “Prosperous Khyber-Pakhtunkhwa” in line with PTI founder Imran Khan.

“Our priority is to ensure that the fruits of development reach every household, every young person, every farmer, every labourer and every business.”

Earlier, the budget was approved during a cabinet meeting chaired by Afridi, who said the government was presenting a “people-centric and revolutionary budget”.

According to official documents, Rs524 billion has been allocated for the Annual Development Programme (ADP), while current expenditure is projected at Rs1.645 trillion. The budget deficit for the upcoming fiscal year is estimated at Rs48 billion.

The province expects to receive Rs1.584 trillion from the federal government, including more than Rs1.24 trillion in federal tax revenues.

Additional projected receipts include Rs149 billion under the war on terror allocation, over Rs53 billion from the oil and gas surcharge, more than Rs24 billion from the windfall levy on oil, and over Rs38 billion in net hydel profit.

The provincial government has estimated its own-source revenues at more than Rs182 billion.

Also Read: Punjab presents Rs5.3tr ‘budget of hope’ for FY26-27

Of the current expenditure, the salary bill is estimated at Rs753 billion, while pension payments are projected at Rs207 billion, and Rs684 billion has been earmarked for non-salary expenditure.

According to the Budget Strategy Paper for fiscal year 2026-27, the province’s gross provincial product reached Rs11.885 trillion, while per capita income increased to Rs290,000. The government reported continued fiscal stability and said it had achieved its surplus target of Rs157 billion during the outgoing fiscal year.

The paper stated that agriculture contributes 30 per cent to provincial growth, while the services sector recorded growth of 3 per cent. Education and labour-related sectors expanded by 14 per cent and 19 per cent, respectively.

The government also highlighted a Rs12.1 billion food security programme and reported spending Rs41 billion on the Sehat Card programme, which provided healthcare services to 32 million people. Literacy in the province stands at 56.7 per cent, according to official figures.

Budget allocation

Sector-wise allocations include Rs468 billion for education and Rs334 billion for health. The law and order budget stands at Rs191 billion, including Rs164.52 billion for policing.

Other allocations include Rs90 billion for local government, Rs29 billion for the interior department, Rs14 billion for transport, Rs29 billion for agriculture, Rs42 billion for energy, and Rs28 billion for zakat. The budget also earmarks Rs35 billion for the merged tribal districts.

Major development initiatives include Rs36 billion for the Peshawar Rehabilitation Programme, Rs7.5 billion for the BRT project, Rs4 billion for Khushhal Hazara, Rs2.5 billion for electric bikes and rickshaws, Rs2 billion for overseas job seekers, Rs2 billion for Ehsaas Kisan Programme, and Rs51 million for minority self-reliance projects.

Additionally, Rs80 billion has been proposed for MTI hospitals, Rs15 billion for Ehsaas Mustahiq Programme, and Rs200 million for Good Governance Roadmap.

Proposed taxes

The Finance Bill proposes new taxes and compliance measures, including taxation on leased Auqaf properties and a new tax on five-marla residential houses.

Amendments to the Motor Vehicles Act, 1958 introduce revised taxation rates for commercially operated vehicles, including rickshaws at Rs1,000 annually, four-seaters at Rs1,500, and six-seaters at Rs2,000.

For larger public transport vehicles, the bill proposes Rs400 per seat for 15-seaters and Rs500 per seat for larger vehicles.

In the hospitality sector, hotels will pay a 5 per cent tax based on occupancy and room capacity, while non-POS hotels will be assessed at 50 per cent occupancy and 10 per cent of rent.

The Finance Bill also introduces stricter enforcement measures, including penalties for late filing, non-registration, and tax evasion, with fines, surcharges, and possible imprisonment in severe cases.

The budget is expected to be formally presented before the provincial assembly for debate and approval.