In a significant fiscal move, the Punjab government on Monday unveiled a tax-free budget worth Rs5.335 trillion for the financial year 2025–26. The announcement was made by Punjab Finance Minister Mujtaba Shuja-ur-Rehman during the provincial assembly session, just a week after the federal budget was presented.
According to the budget document, non-development expenditures — including salaries and pensions — have been allocated Rs2.706 trillion, reflecting a 6% increase from the previous year. An additional Rs590 billion has been set aside for current capital expenditures.
The finance minister began his speech by acknowledging the achievements of the current administration and praised the civil-military leadership for their role during the recent tensions with India. He also highlighted the completion of 6,104 development projects during the outgoing fiscal year.
Record Development Budget of Rs1.24 Trillion
Punjab has set a historic precedent with a development allocation of Rs1.24 trillion, marking a 47% increase from the Rs842 billion allocated in FY2024–25. The finance minister emphasized this as the highest-ever development budget in the province’s history, stating, “This budget marks a strategic shift in Punjab’s development landscape.”
Major initiatives include the establishment of the Nawaz Sharif Institute of Cancer Treatment and Research in Lahore, with a budget of Rs72 billion.
Revenue Targets & Federal Transfers
Federal transfers for Punjab under the Federal Divisible Pool (FDP) are estimated at Rs4,062.2 billion for FY26. Meanwhile, the province aims to generate Rs828.1 billion from its own resources, with the Punjab Revenue Authority (PRA) tasked with collecting Rs340 billion.
Rs740 Billion Provincial Surplus
In alignment with the IMF’s fiscal reform goals, Punjab has set a provincial surplus target of Rs740 billion for FY2025–26. The minister noted that this surplus is contingent on the Federal Board of Revenue (FBR) achieving its revenue collection targets.
Focus on Social Sector & Public Welfare
A substantial Rs494 billion — accounting for 40% of the development budget — has been earmarked for the social sector, focusing on education, health, and social protection.
To support government employees and retirees, the Punjab government announced a 10% salary increase and a 5% hike in pensions for the upcoming fiscal year.
Opposition Reaction
As expected, the budget presentation faced strong protest from Pakistan Tehreek-e-Insaf (PTI) lawmakers, who disrupted the assembly session during the speech.
Conclusion
Punjab’s FY2025–26 budget reflects an ambitious yet carefully structured fiscal policy, prioritizing development, public welfare, and IMF-aligned financial discipline without imposing new taxes.