Budget Blues: High Costs, Low Care, and No Way Out

ISLAMABAD — With a record outlay of Rs 17.573 trillion, the federal budget for FY2025–26, signed into law by President Asif Ali Zardari on June 27, paints a bleak picture for ordinary Pakistanis. Instead of reversing the inequities of past fiscal plans, it reinforces them—channeling billions into debt and defense while leaving education, health, and poverty alleviation to scrape by.

Debt servicing remains the black hole of national finance. At Rs 8.21 trillion, it devours 47% of total spending—up from Rs 7.3 trillion last year—leaving precious little room for development. Education gets just Rs 113 billion (0.6% of the budget), and health fares worse with Rs 32 billion (0.2%), offering no meaningful departure from the chronic underfunding of FY2024–25.

This fiscal neglect comes at a steep human cost. With 44% of children stunted and 32% of girls out of school, Pakistan’s social indicators continue to nosedive. Yet, the budget once again passes over structural investment in human development, preferring instead to stick with elite-friendly allocations that preserve the status quo.

On the revenue side, inequity is just as entrenched. The salaried middle class continues to shoulder the burden, paying Rs 391 billion in income taxes. Meanwhile, agriculture and real estate—sectors long dominated by powerful lobbies and contributing 19% to GDP—remain largely untaxed, bringing in less than 1% of total revenue. The Rs 14.13 trillion tax target for FY2025–26 banks heavily on regressive indirect taxes like a 36% GST, hitting low-income households the hardest.

Energy inefficiencies compound the crisis. Circular debt is stuck at Rs 2.6 trillion, and consumers are forced to cough up between Rs 2.5–2.8 trillion annually for electricity capacity they don’t use. The power burden is crushing industries and stifling exports, with real GDP growth stuck at 2.68%—well below the 3.6% target.

Adding to the disconnect, untargeted subsidies costing over 1% of GDP remain untouched, benefiting elite-run sectors rather than the poor. Defense spending has jumped by 20% to Rs 2.55 trillion, while privatization proceeds—like the Rs 87 billion expected from PIA—raise concerns over transparency and elite enrichment.

For now, the FY2025–26 budget offers little hope for meaningful reform. With high costs, low care, and no exit strategy, Pakistan’s fiscal priorities remain rigged against its people. Without bold steps to broaden the tax base, reprioritize spending, and confront elite capture, the country risks sliding further into economic and human crisis.