ustained under-investment in education is the highlight, once again, of the federal budget. In a country where nearly 38 percent of children aged 5-16 remain out of school, where learning poverty is widespread and where the demographic bulge presents both a crisis and an opportunity, the latest numbers offer a troubling glimpse of our national priorities.

The finance minister’s speech outlined an ambitious vision: positioning Pakistan as a knowledge economy, anchored in IT exports, skills development, and high digital productivity. Policy documents speak of youth employment strategies, innovation hubs and digitisation drives. Yet, the federal education budget offers little evidence that these aspirations are matched by fiscal choices.

In FY 2025-2026, the federal education budget stands at Rs 169 billion, representing a 12 percent reduction from the previous year. While this may also reflect the fiscal pressures, the scale of the cut is significant, particularly the 36 percent reduction in the development budget. This limits the space for urgently needed investments in infrastructure, reform and innovation. In practical terms, it may mean yet another year without functional toilets in a girls’ school and incomplete classrooms in underserved areas. These are small absences that carry outsized consequences for access and dignity in learning.

The decline in education’s share of the federal budget has been gradual but telling: from 1.0 percent in FY 2022-2023, to 0.9 percent, 0.8 percent, and now just 0.7 percent in FY 2025-2026. While the federal allocations represent only a fraction of the overall education ecosystem, most of which lies with the provinces, this downward trend carries significant policy weight. Provincial education budgets, which account for over 90 percent of the sector’s financing, have yet to be announced. The national picture will only be complete once those allocations are known. Yet the federal budget remains a key signal of strategic intent. Given that overall federal spending has expanded, the relative reduction suggests that education is no longer seen as central to the government’s development calculus. The question is no longer just whether we are spending enough, but also whether we fully recognise the long-term economic and social cost of continued underinvestment.

The composition of the federal education budget for FY 2025–2026 remains heavily skewed towards higher education, with 82 percent allocated to tertiary institutions, 9 percent to secondary education, and just 3 percent to primary education. The concern is less about quantum and more about inefficient allocation, unchecked expansion and the absence of robust quality assurance. Meanwhile, primary and secondary schooling, where foundational learning deficits are most pronounced, remain fiscally marginalised.

Long-term trends in allocation versus spending reveal a misalignment between budgetary commitments and delivery. Between FY 2010-2011 and FY 2024-2025, the federal education budget grew by 244 percent in nominal terms. Yet, this increase did not translate into consistent or proportionate spending. In FY 2023-2024, for example, Rs 20 billion remained unspent. This persistent gap reflects systemic weaknesses in planning, limited absorptive capacity and implementation challenges such as delayed releases, project readiness issues and intra-year re-allocation. These inefficiencies continue to compromise the sector’s ability to deliver sustained improvements.

Recurrent allocations, which fund salaries and institutional operations, have grown steadily. In FY 2025-2026, 73 percent of this spending is allocated to higher education, with 13 percent to secondary education and 5 percent to primary. While this reflects institutional scale and cost structures, it also illustrates the limited fiscal room available for primary and secondary education, where public investment tends to have the greatest impact. The development side presents a more complex picture. Two issues stand out: first, the allocation has been reduced by 36 percent compared to the previous year; second, utilisation remains weak. In FY 2018-2019, 63 percent of development funds went unspent; in FY 2023-2024, that figure was 35 percent. Unless planning and implementation systems improve, further reductions risk reinforcing a cycle of underperformance rather than ensuring better financial discipline.

Internationally, the case for sustained and strategic education financing is well-established. The UNESCO Incheon Framework recommends allocating 15-20 percent of public expenditure to education. The Global Partnership for Education ties domestic financing to policy reforms and performance outcomes. The Global Education Evidence Advisory Panel advocates investment in “smart buys,” cost-effective, evidence-based interventions such as foundational learning, structured pedagogy and targeted support for disadvantaged learners. Yet, Pakistan’s federal education budget, at just 0.7 percent of the total federal allocation, shows neither adequate resourcing nor clear prioritisation of learning outcomes.

Repositioning education as a driver of economic and social transformation requires a shift in approach. First, adequacy and equity must be addressed together. Public financing should align with global benchmarks and prioritise foundational learning, with targeted support for underserved regions and socio-economically excluded populations, in line with Article 25-A. Second, effectiveness and efficiency must guide allocations, ensuring that public funds are directed towards interventions that improve access and learning outcomes. Finally, fiscal sustainability must be secured through stronger public financial management, enhanced domestic resource mobilisation and integration of education into broader reform and resilience frameworks.

Budgets are more than fiscal instruments or mere numbers. They are expressions of national intent. They reflect a government’s strategic priorities and its willingness to back aspirations with resources. While the total allocation has increased over time, its declining share, down nearly 20 percent since FY 2022-2023, underscores a misalignment between policy rhetoric and fiscal commitment. If education is to underpin economic renewal, social inclusion and national cohesion, it must be placed at the centre of budgetary thinking, not on its margins.

The writer is affiliated with the Institute of Social and Policy Sciences. He can be reached at ahmadaley@gmail.com