Major chunk of PSDP will go to infrastructure projects
The federal government proposes allocating 65% of its FY2026-27 development budget, totaling Rs729.9 billion, to infrastructure projects, with significant funds also for social sectors.
- Specific allocations within the infrastructure sector.
- Funding for social sectors and less developed regions.
- The difference between budget demands and final allocations.
ISLAMABAD: The federal government has allocated the largest share — 65 percent, or Rs729.9 billion — of the proposed development budget for infrastructure sector projects in fiscal year 2026-27.
According to documents available with this correspondent, the government has proposed Rs135.6 billion for the energy sector, Rs408.9 billion for transport and communication, Rs140.4 billion for the water sector, and Rs45 billion for the physical planning and housing sector for the upcoming fiscal year.
A total of Rs187.2 billion has been proposed for the social sectors, including Rs78.5 billion for education (including the Higher Education Commission), Rs24.3 billion for health and nutrition, Rs70 billion for the SDGs Achievement Programme, and Rs14.4 billion for others.
READ MORE: Requirements total Rs4.097trn: Rs1.126trn set aside for FY27 PSDP: Ahsan
The government has also proposed Rs10.2 billion for governance and Rs43.9 billion for science and information technology for fiscal year 2026-27.
An amount of Rs79.4 billion has been allocated for special areas (AJK and GB), while Rs66.1 billion has been proposed for merged districts for development projects.
In the production sector, the government has proposed Rs9.3 billion, including Rs3.7 billion for food and agriculture and Rs5.6 billion for industries.
According to documents, 65 percent of resources have been earmarked for infrastructure sector projects. Within infrastructure, priority has been given to the transport and communication sector with 36 percent, followed by water resources with 12.5 percent, energy with 12 percent, and physical planning and housing with 4 percent of allocations.
The social sector has been allocated 16.6 percent, comprising education/HEC with 7 percent, health with 2.2 percent, the SDGs Achievement Programme with 6.2 percent, and other social sectors with 1.3 percent.
To bring less developed areas at par with other parts of the country, 4.8 percent has been allocated for AJK, GB, and the newly merged districts of KP.
The proposed allocation for the science and technology and IT sector is for 5.9 percent. Funds for the governance sector stand at 7.1 percent and the production sector at 0.8 percent.
Project-wise proposed allocations have been adjusted within the overall PSDP size of Rs1,126 billion in line with national priorities.
The ministries and divisions had demanded Rs4.1 trillion including Rs1.1 trillion as rupee cover under PSDP 2026-27, for 1,254 projects comprising 764 ongoing and 490 new or unbudgeted projects. The demand for ongoing projects stood at Rs3.3 trillion. However, the Finance Division could only manage and conveyed an Indicative Budget Ceiling (IBC) of Rs1,126 billion for PSDP 2026-27.
Copyright Business Recorder, 2026
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