The ‘wait for it’ budget

THE national discourse on the budget has been dominated by what is in the document for the business community, exporters and salaried employees. And the theme is to celebrate the 10 to 15 per cent tax relief given to salaried employees — taken as proxies for common Pakistanis. These beneficiaries earn more than Rs200,000 a month. But 80pc of Pakistani households spend less than Rs100,000 a month, according to last year’s Household Integrated Economic Survey. This is the entire household which may have multiple earners, and not just one salaried employee.

It is true that there are no taxes on salaried employees with an annual income of less than Rs600,000, which roughly translates to Rs50,000 a month. The majority live in rural areas where one-third of the country’s workers earn their living from farming. The agricultural income tax laws passed across Pakistan last year also peg the minimum annual taxable income at the same level. According to the calculations of the Pakistan Agricultural Coalition, 95pc of farmers earn less than this threshold.

So what is in this budget for the vast majority of Pakistanis? Starting at the bottom, the Benazir Income Support Programme allocation is proposed at Rs838 billion, which increases the payout to Rs18,000 per quarter for each of about 10 million families scoring less than 16 on the BISP scorecard. This is three times the BISP payout before Covid; it keeps pace with the devastating inflation numbers of the post-Covid years. But these are the bottom 25pc of Pakistani families. BISP would enhance their monthly expenditure by around 10pc.

The only allocation among the federal budget’s grants and subsidies comparable to the size of the BISP is Rs830bn for the power sector. This budget item has received enormous amounts putatively in the name of poor electricity consumers. But with the fixed cost of electricity as high as it has become in Pakistan, it is less a means of support for poor consumers and more a way of keeping the power sector’s businesses running.

What is in this budget for the vast majority of Pakistanis?

For education and health, the IMF report from May 2026 lists next year’s spending target at 3pc of GDP. Punjab has allocated Rs750bn, Sindh Rs551bn and KP Rs398bn for education. Typically, more than two-thirds of the education budget is spent on salaries — which are essential — but a good portion of the allocations for rehabilitating schools will also create construction activity, which benefits low-skill workers. About a quarter of public schools in Punjab have been outsourced, with the government providing a fixed monthly amount per child. Sindh is outsourcing schools too. Outsourcing of health centres has been gathering pace in Punjab. Meanwhile, the latter province has allocated Rs500bn for health, Sindh Rs354bn and KP Rs335bn.

These allocations are sizable proportions of each provincial budget but the total education budget comes to less than 1.5pc of GDP — far low­er than the 4pc recommended for developing cou­ntries. The low education and health target also begs the question: if Pakistan is collecting about 11pc of GDP in revenue (including collection by provincial governments) and giving away over 5pc to debt servicing, how can it spend 4pc on education? Well, to grow adequately, a developing country needs to collect about 20pc of its GDP in reven­ues. That is when investment to build sch­o­ols, tr­­a­in teachers and provide school meals is possible.

Teacher training and pedagogical improvement are critical. According to the Idara-i-Taleem-o-Aagahi’s Annual Status of Education Report 2025, half of Class 5 students in Pakistan cannot comprehend written text and math intended for students of Class 2. For FY27, Punjab does have a school meals programme for a million early childhood and primary-level students. Where else would we provide good nutrition to children of poor families if not in schools? But the allocation for the provision of nutrition-dense milks — not full meals — is only Rs7bn. There are allocations for wheat purchases by the provinces, but these expenditures are not linked to school meal programmes as they are in many countries which support both farmers and schoolchildren through them.

Pakistan’s beleaguered farmers need protection: from lopsided government policies on wheat and from the impact of climate change. But the federal budget for covering crop insurance premiums for small farmers is only Rs1bn — sufficient only for a tiny fraction of farmers. Schemes to facilitate bank credit for small farmers have been included by Punjab and the federal government. But while Punjab will pick up the mark-up for small farmer loans, the federal government will not.

Nearly 40pc of the national labour force is illiterate. So is a good portion of the youth entering the workforce. And more than 80pc of Pakistan’s employed workers earn from five sectors where low-skill or no-skill jobs dominate: construction, transport, wholesale and retail trade, community and personal services, and manufacturing. For them, the minimum wage has been increased in line with post-Covid inflation. But few employers actually pay it.

The petroleum levy collection target is maintained around the same level as the outgoing year, with a similar consumption of transport fuels assumed. But motorcycles account for some 40pc of Pakistan’s transport fuel consumption. Therefore, a similar proportion of this levy will come from the pockets of the lower middle class: clerks, farmers, labourers, etc.

This budget is a direct win for Pakistan’s women and girls — the removal of 18pc sales tax on sanitary pads. The majority of Pakistanis can expect to be secondary beneficiaries of the budget’s facilitation of the manufacturing and construction sectors. Direct beneficiaries of major budget outlays would be the families at the bottom receiving BISP payouts, those near the top receiving tax relief on their salaries, and those who get subsidised housing loans under the Prime Minister’s Apna Ghar programme. Most Pakistanis can expect to be secondary beneficiaries of the budget’s facilitation of the manufacturing and construction sectors. So it’s a trickle-down, ‘wait for it’ budget.

The writer is CEO of the Pakistan Agricultural Coalition, chairman of Idara-i-Taleem-o-Aagahi, and an adviser on energy policy. He is the author of Dou Pakistan: Har Pakistani Gharanay Tak Khushhaali.

Published in Dawn, July 10th, 2026 ...