Sindh budget

Following the federal budget on Monday (June 9), Friday saw the release of the Sindh budget. Out of all the provincial budgets, this is the one that arguably draws the most attention given that Sindh is home to the country’s long-suffering business capital. Sadly, the Sindh budget for FY2025-26 failed to appease those hoping Karachi would get the major uplift its residents have long wanted. The budget has been criticised by opposition parties who say urban Sindh has been ignored once again and that the budget does not include a mega development project for Karachi. Reports have also noted that Karachi gets no new infrastructure schemes. And this is not even the budget’s biggest issue. That would be the fact that it ends up with a deficit of around Rs38.4 billion despite the fact that the country, as a whole, needs to produce a primary budget surplus of 1.6 per cent under IMF guidelines. While some would call this fiscal indiscipline, it is hard to see how provincial governments can live up to their mandate of actually helping people without some fiscal expansion.

The Rs3.45 trillion outlay in the Sindh budget marks a 12.9 per cent increase over the current fiscal year’s outlay. Key highlights include a 12 per cent ad-hoc relief allowance for all government employees (BPS-01 to BPS-16), 10 per cent ad-hoc relief for employees (BPS-17 to BPS-22) and 8.0 per cent increase in pensions. The education budget has been raised to Rs523.73 billion, a 12.4 percent jump from last year, and the health budget will rise to Rs326.5 billion from Rs302.2 billion. Rs520 billion has also been allocated for the Annual Development Programme (ADP) 2025-26, which focuses on education, healthcare, flood rehabilitation, infrastructure, renewable energy and regional uplift.. And, despite the criticisms regarding Karachi, the ADP does include a Karachi Urban Infrastructure Development initiative of Rs12 billion. There have also been some tax reductions, with the Sindh Sales Tax on Services (SST) for certain services reduced from 10 per cent to 8.0 per cent, SST on third-party vehicle insurance cut from 15 per cent to 5.0 per cent.

Overall, this Sindh government seems to want to make sure that it has not forgotten the people, but it is still unclear if the level of help on offer will be enough. The budget is also heavily reliant on federal transfers to meet its expenditures. Sindh reportedly received Rs282 billion less than budgeted in federal transfers during FY2024-25, compelling austerity and revised projections. And this is before we even get to the issue of the deficit and whether it would be acceptable under the overwhelming imperative for fiscal consolidation. Then there are the capacity issues that plague provincial governments in Pakistan, which often raise questions about whether what has been promised can be delivered within allocated amounts. There is a reason so many past projects remain uncompleted and mired by delays. Sindh has promised help, but how much of it will it actually be able to give?