PSDP FY27 set at Rs1tr, infrastructure takes lead

June 10, 2026 (MLN): The federal government has proposed a Public Sector Development Programme (PSDP) of Rs1.00 trillion for fiscal year 2026-27, channelling the bulk of spending into infrastructure with transport and communication alone receiving Rs355.9 billion, the largest single sub-sector allocation in the entire development budget.

The proposed outlay matches last year's original allocation of Rs1,000 billion, though it marks a significant step up from the revised FY2025-26 figure of Rs820bn, suggesting the government is pushing for accelerated project execution after a year of compressed spending.

Infrastructure as a whole commands Rs602.5bn more than 60% of the total with transport and communication emerging as the dominant priority at Rs355.9bn, up sharply from Rs264.1bn in the revised FY2025-26 estimates.

Among the headline projects are three packages for the N-25 Quetta-Karachi highway at Rs100bn, the Sukkur-Hyderabad Motorway M-6 at Rs30bn, and the Sindh Coastal Highway extension at Rs25bn. The ML-1 railway upgrade has been allocated Rs25 billion.

Energy and water, the other pillars of the infrastructure envelope, received Rs116.2 bn and Rs75.8bn respectively. The Mohmand Dam Hydro Power Project and the Dasu Hydro Power Project have been earmarked Rs26 billion and Rs21bn, while the Diamer Basha Dam project received Rs14bn.

Social sector spending rises modestly to Rs180.6bn from Rs146.6bn in the revised FY2025-26 budget, with Education including the Higher Education Commission seeing a notable jump to Rs74.5bn from Rs52.6bn.

Health and Nutrition has been allocated Rs22.1bn, up from Rs14bn. The Establishment of Daanish Schools figures among the salient projects at Rs22bn.

Special Areas covering Azad Jammu and Kashmir and Gilgit-Baltistan have been allocated Rs88.8 billion, up from Rs67.7bn, while Merged Districts receive Rs56.1bn.

Science and IT a sector the government has flagged as a growth priority receives Rs41.4bn. The construction of IT Parks in Islamabad and Karachi is budgeted at Rs11bn, with Customs Digital Enforcement Stations also part of the salient features list.

The Production sector, covering food, agriculture, and industries, nearly triples to Rs12.6bn from just Rs4.7bn in the revised FY2025-26 budget a relatively small but notable increase showing some attention to the productive base of the economy.

A new Multiple Sectors category has been introduced with an allocation of Rs5bn.

The PSDP document notes that inclusion of certain projects was recommended on condition of approval from the relevant competent forum before the passage of the Annual Budget 2026-27.

Projects not cleared by Parliament would be dropped and their allocations redistributed based on priority requirements.

Sector-wise PSDP Allocations FY2025-26 vs Proposed FY2026-27 (Rs billion)

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