The government unveiled a comprehensive development budget of Rs3.675 trillion for the upcoming fiscal year, emphasizing the consolidation of existing projects while introducing few new initiatives. Notably, the second phase of the China-Pakistan Economic Corridor (CPEC 2.0) stands out as the sole major new project, receiving an initial allocation of Rs1 billion to commence its next phase.
From the total development budget, Rs1 trillion has been designated for the Public Sector Development Programme (PSDP). The remaining funds include Rs2.224 trillion allocated for provincial Annual Development Programmes (ADPs) and Rs451 billion earmarked for development expenditures by various state-owned enterprises (SOEs).
Infrastructure and energy sectors dominate the federal development agenda. Finance Minister Muhammad Aurangzeb highlighted in his National Assembly budget speech that over 60 percent of federal development funds are directed toward core infrastructure and social sectors. Transport and communications secured the largest portion of the infrastructure budget, with over Rs365 billion dedicated to enhancing logistics and connectivity.
Significant funding has been allocated to key infrastructure projects such as the N-25 highway linking Karachi to Balochistan, which received Rs100 billion, and the M-6 Sukkur-Hyderabad Motorway, allocated Rs30 billion. Meanwhile, fresh financing from the Asian Development Bank has been arranged for the long-delayed Main Line-1 (ML-1) railway project from Karachi, complemented by a Rs2 billion allocation for the Thar Coal Connectivity Project.
The energy sector also garnered substantial support, with Rs116.2 billion allocated primarily for flagship hydropower projects including the Dasu, Tarbela, and Diamer-Bhasha dams. In a significant shift towards renewable energy, approximately Rs50 billion has been set aside for nine solar and wind power initiatives, alongside Rs13.1 billion for expanding the national power grid.
Addressing regional disparities, the budget prioritizes ongoing mega-projects in Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan (GB), allocating Rs45 billion and Rs44 billion respectively. Additionally, the prime minister has approved special disbursements of Rs5 billion for AJK and Rs4 billion for GB. The newly merged tribal districts of Khyber Pakhtunkhwa have been allocated Rs56 billion to support their integration and development efforts.
In the social sector, higher education received an allocation of around Rs46 billion, including Rs34.9 billion dedicated to upgrading the Pakistan Education and Research Network (PERN) to boost digital learning and artificial intelligence skills among youth. Furthermore, to tackle climate change and urban migration challenges, Rs54.6 billion has been earmarked for sustainable urban development and housing. Under this initiative, the government plans to facilitate the construction of 150,000 climate-resilient housing units nationwide.
