BUDGET FY26: KP govt presents over Rs2.1tr budget amid opposition protest

PESHAWAR: The Khyber Pakhtunkhwa government on Friday presented a Rs2,119 billion surplus budget for the fiscal year 2025-26 without imposing any new taxes, announcing a 10 percent increase in the salaries of government employees and a 7 percent in pensions.

The minimum wage was raised from Rs36,000 to Rs40,000. The budget session was marked by protests from opposition members over alleged corruption in the province.

Presenting the budget in the provincial assembly, Finance Minister Aftab Alam said the estimated expenditures for the fiscal year 2025-26 would be Rs1,962 billion, resulting in a surplus of Rs157 billion.

He said the government expected to receive Rs292.34 billion from the federal government for the merged tribal districts. This includes Rs80 billion as a current budget grant, Rs39.6 billion for the annual development programme (ADP), Rs50 billion under the Accelerated Implementation Programme (AIP), Rs42.74 billion as a share from other provinces and Rs17 billion for Temporarily Displaced Persons (TDPs).

Other expected receipts include Rs3.293 billion from the Public Sector Development Programme (PSDP), Rs1,506.92 billion from federal receipts, Rs129 billion from provincial own receipts, and Rs10.25 billion from other sources.

The province also expects to collect Rs137.912 billion from the one percent share of the divisible pool in the war on terror, Rs57.115 billion as straight transfers from oil and gas royalties, Rs58.151 billion as windfall levy on oil, Rs34.58 billion as net hydel profit for the current year, and Rs71.41 billion as net hydel profit arrears.

The development expenditure for the upcoming year has been set at Rs547 billion, which includes Rs195 billion for the Provincial ADP, Rs39 billion for district ADPs, Rs39.6 billion for the merged areas’ ADP, Rs92.74 billion for AIP, Rs177.188 billion from foreign project assistance, and Rs3.472 billion from the federal PSDP. The finance minister stated that instead of introducing new taxes, the government had expanded the tax base. It expects to generate Rs 83.5 billion in tax revenues and Rs 45.5 billion in non-tax revenues during the fiscal year. The Rs10.25 billion in other receipts include Rs 0.25 billion in capital receipts and Rs 10 billion from other financial sources. Additionally, Rs1,147.761 billion is expected from federal tax assignments.

The current expenditure for the settled districts is estimated at Rs1,255 billion, which includes Rs288.514 billion for provincial salaries, Rs288.609 billion for tehsil salaries, Rs190.297 billion for pensions, Rs334.028 billion for non-salary components, Rs65.657 billion for Medical Teaching Institutions (MTIs), Rs37.545 billion for tehsil non-salary expenses, Rs40.35 billion in capital expenditure, and Rs10 billion from other means.

For the merged areas, current expenditure is estimated at Rs160 billion, including Rs56.842 billion for provincial salaries, Rs46.865 billion for tehsil salaries, Rs4.67 billion for pensions, Rs24.285 billion for non-salary expenses, Rs17 billion for TDPs, and Rs10.339 billion for tehsil-level non-salary expenditure.

In terms of revenue, the government expects to collect Rs129 billion, including Rs17 billion from the debt management fund, Rs7.2 billion from cement royalties in the mines and minerals sector, and Rs4.8 billion in additional taxes by the KP Revenue Authority.

Stamp duty on the transfer and allotment of residential and commercial plots has been reduced from 2 percent to 1 percent.

Property tax on plots measuring up to 4.9 marlas has been waived. The hotel bed tax has been reduced from 10 percent to 7 percent.

Professional tax on individuals earning Rs36,000 per month has been abolished. Tax relief has also been maintained for environmentally friendly electric transport and the ex-Fata and Pata areas, with no new taxes levied.

The health budget has been increased to Rs 276 billion for 2025-26 from Rs 232 billion in 2024-25—a 19 percent rise. The Sehat Card Plus programme’s budget has been raised to Rs35 billion from Rs28 billion, showing a 25 percent increase.

The elementary and secondary education budget has been increased by 11 percent to Rs363 billion. A special education emergency has been announced to improve literacy and reduce the number of out-of-school children, with Rs5 billion allocated for this initiative. Rs5.9 billion has been earmarked for upgrading infrastructure in 32,500 public schools, including essential facilities, classroom repairs, educational materials, and co-curricular activities.

For higher education, Rs50 billion has been allocated for 2025-26, up from Rs36 billion last year. University budgets have been increased from Rs3 billion to Rs10 billion; Rs3.5 billion has been set aside for constructing five new colleges, and Rs2.772 billion for converting existing colleges into centres of applied science and technology. The scholarship endowment fund has also been increased by Rs1.224 billion.

About Rs55.39 billion has been allocated for the local government and rural development department, with Rs6.159 billion for northern districts, Rs3.3 billion for southern districts, Rs5.3 billion for central districts, and Rs2.95 billion for the merged districts. Rs2 billion has been earmarked for constructing public parks in various districts, while Rs800 million will be used for building slaughterhouses in Peshawar, Charsadda, Swat, Haripur, and Dera Ismail Khan.

For dairy and livestock development, Rs17 billion has been allocated, including Rs500 million for horse breeding projects in four districts and Rs1 billion to boost cattle production. Rs1 billion has been allocated for veterinary centres in merged areas and Rs300 million for poverty alleviation and local economic support in the former tribal areas.

About Rs158 billion has been set aside for police and law and order—an increase of 27 percent compared to last year’s Rs124 billion. Of this, Rs13 billion will be used to procure ammunition, vehicles, and other equipment.

A Command and Control Centre will be set up for the Safe City Project, which will be extended to three additional districts. Police and Counter Terrorism Department infrastructure in merged areas will also be upgraded.

Over Rs6 billion has been allocated for the Sehat Sahulat Programme in merged areas, including Rs1.2 billion for basic and rural health units. Cardiac units of the Peshawar Institute of Cardiology will be set up in Mardan and Bannu.

A nursing college will be established in Upper Chitral, and hospitals in Kurram and Orakzai will be upgraded and renovated.

Other allocations include Rs123 billion for communication and works, Rs32 billion for public health engineering, Rs46 billion for irrigation, Rs1.04 billion for housing, Rs2.7 billion for industries, Rs19.11 billion for Zakat, Ushr, and special education, and Rs11.6 billion for sports and youth affairs. The Disparity Reduction Allowance for government employees has been increased from 15 percent to 20 percent. The provincial government also proposed to bring the salaries of constables to inspectors in KP police at par with their counterparts in Punjab. The martyr compensation package for constables, ASIs, and inspectors has been increased to Rs11 million; for DSPs and ASPs to Rs16 million; and for SPs, SSPs, and DIGs to Rs21 million. Allotment of five, seven, 10 marlas and one kanal plots have also been announced for the families of martyred personnel. The finance minister urged the federal government to convene a National Finance Commission (NFC) Award meeting and provide additional grants for the development and non-development needs of the merged areas.