Sindh Chief Minister Syed Murad Ali Shah announced on Thursday that the province is confronting a budget deficit approaching Rs300 billion for the fiscal year 2026-27, primarily caused by significant reductions in federal financial support.
At a press conference following the presentation of the provincial budget in the Sindh Assembly, Shah outlined a total revenue projection of Rs3.525 trillion. He highlighted that Sindh continues to face a substantial shortfall in federal revenue transfers, amounting to Rs441 billion as of May, alongside a Rs52 billion deficit in its own provincial revenues.
Shah pointed out that the Federal Board of Revenue (FBR) aims to collect Rs15.264 trillion in the upcoming year, though its growth rate has plateaued between 10 and 11 percent annually. In contrast, the Sindh Board of Revenue has achieved an impressive 23 percent growth in independent revenue this year, sustaining a 14-year upward trend.
He emphasized that the province’s development budget has been significantly affected by the cut in federal funding, noting that Islamabad disbursed only Rs50 billion of the Rs76 billion promised last year. For the next fiscal year, the federal government has committed Rs64 billion to Sindh.
In a notable development, Shah defended the province’s financial concessions amid national economic challenges, stating that Sindh exercised its constitutional right to provide a financial grant to the federal government to support national solidarity and defense expenditures. He stressed that provinces have stood by the center during difficult times but warned that this grant would only be extended after Sindh receives its full financial entitlements.
Shah also called for a formal revision of the National Finance Commission (NFC) Award formula, which governs the distribution of federal tax revenues between the center and provinces.
Facing fiscal constraints, Sindh’s total projected expenditure stands at Rs2.3 trillion. To manage this, Shah announced a freeze on new provincial development projects for the upcoming year, prioritizing the completion of 2,056 ongoing initiatives instead.
Despite austerity measures, development spending will exceed Rs850 billion, bolstered by Rs256 billion in foreign aid and Rs109 billion allocated for public-private partnership (PPP) projects. A modest Rs15 billion has been earmarked for district-level development.
Emergency expenditures have further strained the budget, including an Rs8.5 billion relief package for victims of the Gul Plaza incident. Government salaries and pensions remain the largest single expenditure for the province.
Shah announced that the 10 percent ad-hoc relief allowance introduced in 2025 has now been incorporated into the basic pay scale, and the provincial minimum wage has been increased to Rs43,000 per month. Additionally, Rs686 billion has been allocated in grants and subsidies to various hospitals and public welfare institutions.
Responding to political criticism over the freeze on new infrastructure projects, Shah rejected claims of governance failure, citing the Pakistan People’s Party’s (PPP) recent electoral victories in Gilgit-Baltistan and Sindh. He asserted, “We did not launch new development projects for two years, yet the public voted for us in even higher numbers,” adding that the party maintains a direct connection with the people, who understand the fiscal challenges and have dismissed misinformation.
Shah revealed plans to introduce new agricultural cooperation legislation aimed at supporting small farmers. The law will enable pooled landholding arrangements, allowing groups of ten farmers to combine their lands to access larger agricultural loans. It will also facilitate joint purchases of irrigation systems and land-leveling equipment.
The chief minister noted that Sindh’s financial contribution to the Shahrah-e-Bhutto project is limited to Rs9 billion. He also announced an initiative to make municipal waste economically viable by transforming the provincial solid waste management authority into a financially self-sustaining entity through revenue from recycling and waste sales.
In a symbolic gesture, Shah mentioned that he walked on the floor of the Sukkur Barrage during repair work for the first time in 94 years. The barrage has undergone significant upgrades, with 44 old gates replaced, extending its operational life by an additional 30 years.
Addressing water scarcity, Shah highlighted that Sindh currently faces a 30 percent water shortage, compared to 11 percent in Punjab. He has raised this issue with the federal government, the prime minister, and the National Economic Council, describing the shortage as a grave injustice to poor farmers in Sindh. He accused the federal water regulator of misrepresenting facts before parliament and urged the authority to improve its performance to ensure equitable water distribution. Shah also called on the Pakistani media to spotlight the critical water shortage situation in Sindh.
